Marriage of Hinman CA6 ( 2023 )

Filed 12/29/23 Marriage of Hinman CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
In re the Marriage of TABETHA and H050359
BRIAN HINMAN. (Santa Clara County
Super. Ct. No. 20FL000321)
TABETHA HINMAN,
Appellant,
v.
BRIAN HINMAN,
Respondent.
In this dissolution of marriage action, Tabetha Hinman appeals an order entered
after a bifurcated trial on her claims for reimbursement. Tabetha1 sought reimbursement
for expenses benefitting respondent Brian Hinman’s separate property that were paid
during marriage from bank accounts. The trial court denied most of her reimbursement
claims. Tabetha contends that the trial court erred by (1) incorrectly interpreting the
parties’ premarital agreement to limit reimbursements from undisputed community
property joint accounts and (2) disregarding Tabetha’s evidence of transmutation and/or
commingling of Brian’s premarital bank accounts. We conclude that the trial court erred
in its interpretation of the premarital agreement, but that substantial evidence supports the
trial court’s findings regarding Brian’s premarital bank accounts. We reverse with
1
As is customary in family law proceedings, we use the parties’ first names for
clarity. We intend no disrespect.
directions for the trial court to enter a different order as to the community’s right to
reimbursements for expenses paid from the parties’ undisputed community property joint
bank accounts, and we remand the case for the trial court to determine the amount of the
reimbursements Brian owes to the community.2
I. FACTUAL AND PROCEDURAL BACKGROUND
Tabetha and Brian married on June 25, 2005, and separated on November 26,
2019. They have one minor child.
The parties met while working at the same company, 2Wire, where Brian was the
CEO and Tabetha was general counsel. Tabetha claims that prior to the parties’
marriage, Brian insisted on a premarital agreement. After about six months of multiple
discussions regarding the agreement, the parties, each with their own attorneys, engaged
a mediator to draft the premarital agreement. On June 21, 2005, Tabetha and Brian
signed their premarital agreement (PMA), establishing their community and separate
property rights during the marriage.
The PMA states, in part, “. . . absent a future agreement in writing by us, our intent
is to specifically define property which hereafter remains the separate property of each of
us or becomes under the terms of this Agreement either community property or separate
property of the other party.” In short, the PMA establishes that, absent a signed writing,
the parties’ premarital assets would remain separate property and any employment
earnings during marriage as well as jointly titled assets would be community property.
2
Although neither party raised the issue on appeal, the trial court did not make
findings as to the amount to be reimbursed to the community, or whether any interest
applies. Tabetha’s written closing arguments stated the sums she contends should be
reimbursed to the community. In her objections to the proposed statement of decision
and reply to Brian’s briefing to such objections, Tabetha also requested the court to
clarify the expenses to be reimbursed by Brian and opposed Brian’s request for further
“reconciliation with the experts” to determine the reimbursements. It appears the trial
court overruled such objections because the statement of decision is silent on the amount
of reimbursements owed.
2
Brian’s net worth is listed in the PMA at about $20 million compared to Tabetha’s total
assets at about $261,000.
Upon their marriage, Tabetha quit her employment at 2Wire, and the parties
resided at one of Brian’s two separate property residences. Brian continued working at
2Wire until mid-2006, earning an annual salary of $289,000. Between 2007 to 2015,
Brian worked as a venture partner with income that fluctuated, but which, at its peak, was
about $750,000 per year. Throughout marriage, Brian paid the community’s expenses
with his community property employment earnings and with his separate property when
the community income was insufficient.
During marriage, Brian spent over $10 million on the construction and
maintenance of his two separate property residences, paid from the parties’ jointly titled
accounts and Brian’s premarital accounts.3 At trial, Tabetha contended the community is
entitled to reimbursement for those expenses because the payments came from
community property accounts. Brian disputed those allegations, contending the source of
the payments came from his separate property. Each party relied on her and his
respective interpretation of the PMA to support her and his contentions. We therefore
summarize the relevant portions of the PMA.
A. Separate Property as Defined by the PMA
Under section 5.2, the properties identified on exhibits A and B of the PMA would
remain the separate property of Tabetha or Brian unless otherwise specified. Under
section 5.4.5 of the PMA, Brian’s separate property also included a contractual
“management carve-out” right with his then employer, 2Wire, for future income related
to the potential sale of 2Wire securities by the company.
3
Tabetha’s forensic accountant testified at trial that a total of $15,403,275 had
been spent on expenditures for both separate properties; Tabetha claims $13,261,594
derived from community funds. Brian’s forensic accountant provided a summary at trial
showing the expenditures for both properties totaling $11,744,792; Brian’s forensic
accountant calculated $363,479 came from community funds.
3
Exhibit B of the PMA lists Brian’s separate property which, at that time, included
a residence in Los Gatos, a residence in Carmel Valley, various bank and brokerage
accounts, and multiple investments (hedge funds, private investments, and venture capital
funds). Brian’s premarital and separate property bank and brokerage accounts included a
Merrill Lynch brokerage account (Merrill Lynch Account) and a bank account held at
Beverly Cooperative Bank (Beverly Account). Most of the expenses for Brian’s Los
Gatos and Carmel Valley residences were paid from the Merrill Lynch Account and the
Beverly Account.
At trial, Tabetha claimed the Beverly Account became a community property joint
account within the definition of the PMA because Brian added her as an owner to the
account. As to the Merrill Lynch Account, Tabetha claimed it was commingled with
community property funds and thus became presumptively community property. Except
for the Beverly Account and Merrill Lynch Account, Tabetha did not dispute the
character of the other assets identified on exhibit B as Brian’s separate property.
B. Community Property as Defined by the PMA
Sections 5.3 and 5.4 of the PMA identify what would become community property
upon marriage, which included a gift from Brian of $4 million to the community, as well
as each party’s wages, salaries and earnings from employment during marriage,
excluding contributions to retirement accounts.
The parties also agreed to open joint accounts upon marriage. Section 6.1 of the
PMA—the key section in dispute on this appeal—states: “Common and Joint Accounts.
We shall establish jointly owned checking, savings, and/or brokerage accounts for our
joint expenses. We shall contribute all community earnings to these accounts and these
accounts will be our community property, owned one-half by each of us regardless of the
respective amounts contributed to the accounts by each. Any items of property
purchased by us with funds withdrawn from these jointly owned accounts shall be our
community property. To the extent that either of us contributes separate property funds
4
to these joint accounts, the separate property contributions shall become community
property not subject to reimbursement.” (Italics added.)
Upon their marriage, Brian made the $4 million gift to the community, and the
parties also opened two jointly owned bank accounts, the first one at Wells Fargo Bank
and later at First Republic Bank (collectively, the Joint Accounts). During marriage,
consistent with the terms of the PMA, Brian deposited his employment earnings in the
Joint Accounts. Brian also regularly deposited funds from his separate property accounts
into the Joint Accounts to pay community expenses.
At trial, the parties did not dispute the community property character of the Joint
Accounts. Brian admitted to paying expenses for his separate property residences from
the Joint Accounts. Nevertheless, Brian argued the community was not entitled to
reimbursements for his separate property expenditures because the funds in the Joint
Accounts originated from his separate property. Brian claimed his separate property
deposits into the Joint Accounts did not automatically become community property the
moment the funds were deposited.
C. Reimbursements, Ownership, and Commingling as Defined by the PMA
During the bifurcated trial, the parties and the trial court also relied upon language
in the PMA governing reimbursements, maintaining and/or changing the ownership and
character of property, and commingling of property.
Section 5.10 provides, in part, “[c]ontributions made during the marriage from
community property to the improvement of our separate property shall be subject to
reimbursement to the community without interest or adjustment for change in value.”
Section 5.11.5 also states, in part, “[a]ny payments from community property on a loan,
taxes, maintenance, or improvements for the benefit of separate property shall not change
the character of such property but shall be subject to reimbursement to the community
with reasonable interest subject to any offsets allowed by law.”
5
Section 5.11.1 states, in part, “[t]itle shall determine the ownership interest of each
of us in any real property held by us or in any personal property which is specifically
titled unless we agree otherwise in writing. However, titling errors which are made by
third parties, or incorrect titling which clearly conflicts with the intent of a party or
parties changing or taking title, are subject to correction.” The next paragraph, section
5.11.2, states “a change in the form of separate or community property shall not
constitute a change of character of that property. For example, if a non-titled or separate-
titled asset is purchased using funds from a party’s separate property bank account, the
asset remains that party’s separate property.”
With respect to any transfers of property during marriage, section 5.11.3 states
“[n]otwithstanding the provisions of this Agreement, either of us may transfer, convey,
devise, or bequeath any property to the other subsequent to the date of marriage. Neither
of us intends by this Agreement to limit or restrict in any way the right to receive any
such transfer, conveyance, devise, or bequest from the other at such future time. Such
transfers must be evidenced by a written instrument signed by the transferor, except for
clothing, jewelry, or personal effects.” (Italics added.)
As to any commingling of property during marriage, section 5.11.4 provides the
following: “Except as otherwise provided in this Agreement, the occurrence of transfers
through a community account or other form of community ownership or the mistaken
commingling or otherwise failing to segregate the separate property or separate income of
either of us by a third party alone shall not change or constitute a change of character of
that property or income, nor shall it constitute a transmutation of that separate property or
income into community, quasi-community, joint marital, or other similar type of
property, and vice versa, except that the terms of sections 5.11.1 and 5.11.2 shall
prevail.” (Original underscoring, italics added.)
6
D. The Bifurcated Trial and Statement of Decision
Pursuant to the parties’ stipulation, the trial court bifurcated the issue of Tabetha’s
reimbursement claims. At trial, the parties stipulated that the PMA was valid and
binding. They also stipulated to the following fact: “The parties agree the Quickbooks
data kept during the marriage upon which both parties are relying in preparing their
tracing accurately reflect the financial transactions that took place during the parties [sic]
marriage, and as such may be relied on for purposes of tracing funds used during the
marriage. However, inasmuch as the Quickbooks data is voluminous and was prepared
by a third party, each party reserves the right to correct or challenge any entries or
comments which the party can show to be erroneous.”
In March 2022, trial on the bifurcated issue commenced with testimony from each
party and their respective forensic accountants. The forensic accountants provided their
analyses regarding the total amount of expenditures for Brian’s separate property
residences paid from Joint Accounts, the Beverly Account and the Merrill Lynch
Account. Because the parties did not dispute the character of the Joint Accounts or the
validity of the PMA, the majority of the parties’ testimony and exhibits related to the
Beverly Account and the Merrill Lynch Account.
To support her claim that Brian added her as an owner of the Beverly Account,
Tabetha introduced two documents at trial, trial exhibits 8 and 10. Trial exhibit 8 is a
copy of the first page of a bank statement dated May 30, 2014, for the Beverly Account.
The bank statement is addressed to “Brian L Hinman [¶] Tabetha Hinman [¶] George R
Kaplan PC[.]” Trial exhibit 10 is an untitled bank form for the Beverly Account signed
by Brian in 2006 that lists the “Account Owner(s) Name & Address” as “Brian L.
Hinman [¶] Tabetha Hinman [¶] George R. Kaplan [¶¶¶] PO BOX 1026 [¶] SALEM, MA
01970-6026[,]” and has the signatures of all three listed individuals underneath. On the
left side of the bank form, underneath the section for “Ownership of Account[,]” the
content is blank. Per Brian’s testimony, trial exhibit 10 is a signature card for the Beverly
7
Account, identifying the then authorized signatories for the account, not a transfer of
ownership of the account to Tabetha. Tabetha, along with his personal accountant, Mr.
Kaplan, were signatories to the Beverly Account for convenience and the account is
owned by the Brian L. Hinman 2003 Trust Agreement, for which Brian is the sole trustee.
Brian provided copies of wire instruction letters dated before and after 2006—the year
identified on trial exhibit 10—identifying his trust as the owner of the Beverly Account.
To support her claim that Brian commingled community property funds into the
Merrill Lynch Account, Tabetha’s forensic accountant identified several large deposits
during marriage categorized in the parties’ Quickbooks data file as “salary.” Brian
testified to the source of the large deposits being from his separate property, mainly the
contractual “management carve-out right” from his former employer which, per section
5.4.5 of the PMA, is identified as his separate property.
After a two-day bifurcated trial and subsequent briefing related to Tabetha’s
objections to the proposed statement of decision, the trial court made the following
findings and orders: (1) The Joint Accounts were “jointly owned, community accounts”
within the definition of section 6.1 of the PMA. However, the language of section 6.1
“does not operate to create a transmutation of separate funds, which were specifically
used to pay separate expenses, into community property by the simple act of such funds
passing through a joint account. Separate funds that passed through a community
account retained their character when thereafter used for separate expenses.”
Accordingly, with respect to the Joint Accounts and based on the trial court’s
interpretation of the PMA, the community’s right of reimbursement was limited to “only
the expenditures from joint accounts made while there was not separate money in the
accounts to cover them. . . .” (2) The Beverly Account was and remains Brian’s separate
property and ownership “never changed so as to make it a jointly-owned or community
account” within the definition of section 6.1. The Merrill Lynch Account was and
remains Brian’s separate property and there was no evidence the account had been a
8
commingled community account. Accordingly, with respect to the Beverly Account and
the Merrill Lynch Account, “the community does not have a right to reimbursement to
funds from those accounts that were used on [Brian’s] separate property residences.”
II. DISCUSSION
On appeal, Tabetha argues the trial court erred by misinterpreting section 6.1 of
the PMA and by disregarding her evidence regarding transmutation and/or commingling
of the Beverly and Merrill Lynch Accounts. Brian contends the trial court’s
interpretation of the PMA is correct and reaches an equitable result, and the trial court’s
findings on the character of the bank accounts are supported by substantial and unrefuted
evidence. For the reasons stated below, we conclude the trial court erred in interpreting
the PMA to include an exception that separate property funds deposited into the Joint
Accounts remained Brian’s separate property if the funds were later used to pay his
separate property expenses. As to the Beverly Account and the Merrill Lynch Account,
we conclude there is substantial evidence to support the trial court’s findings and orders.
A. Standards of Review
We review the interpretation of a contract, including a premarital agreement, de
novo. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865 [contract
interpretation is subject to independent review]; In re Marriage of Bonds (2000) 24
Cal.4th 1, 13 [rules governing contract interpretation generally apply to premarital
agreements].) We review a trial court’s findings regarding the character of specific
property for substantial evidence. (Beam v. Bank of America (1971) 6 Cal.3d 12, 25.) A
trial court’s factual findings regarding a property’s separate or community character is
binding and conclusive on review when supported by substantial evidence, even if
evidence conflicts or supports contrary inferences. (Ibid.; In re Marriage of Rossin
(2009) 172 Cal.App.4th 725, 734; Howard v. Owens Corning (1999) 72 Cal.App.4th 621,
631.) On appeal, “[i]t is not our task to weigh conflicts and disputes in the evidence . . . .
We must accept as true all evidence and all reasonable inferences from the evidence
9
tending to establish the correctness of the trial court’s findings and decision, resolving
every conflict in favor of the judgment.” (Howard, at pp. 630-631.)
B. Section 6.1 of the PMA Expresses the Parties’ Intent to Transform Deposits
into their Joint Accounts to Community Property
Tabetha first claims the trial court erred in finding Brian’s “[s]eparate funds that
passed through [the Joint Accounts] retained their character [as separate property] when
thereafter used for [Brian’s] separate expenses.” Tabetha contends that under section 6.1,
once separate property funds were deposited into the Joint Accounts, they became
community property, regardless of how the funds were later spent. She asserts the trial
court’s interpretation is inconsistent with the PMA, and the community should have been
reimbursed for all funds paid out of the Joint Accounts to benefit Brian’s separate
property residences. Brian claims the trial court’s interpretation of section 6.1, in
conjunction with section 5.11.4 of the PMA, is correct and logical. He contends neither
party would have reasonably intended him to be required to reimburse the community for
using his own separate property funds to pay his separate property expenses simply
because the funds passed through a joint account. Based on our de novo review of the
PMA, we conclude the trial court erred in its interpretation of the PMA.
1. The Joint Accounts are Community Property for All Purposes
We apply well-established principles of contractual interpretation to
sections 5.11.4 and 6.1 of the PMA. “The rules applicable to the interpretation of
contracts have been applied generally to premarital agreements.” (In re Marriage of
Bonds, supra, 24 Cal.4th at p. 13; Civ. Code, § 1635 et seq.) The primary object of
contract interpretation is to ascertain and carry out the mutual intention of the parties at
the time the contract was formed, determined from the writing alone, if possible. (Civ.
Code, §§ 1636, 1639; Santisas v. Goodin (1998) 17 Cal.4th 599, 608.) When the
language of a contract is “clear, explicit, and unequivocal, and there is no ambiguity, the
court will enforce the express language.” (In re Marriage of Iberti (1997) 55
10
Cal.App.4th 1434, 1440 [interpreting stipulated judgments based on the rules applicable
to the interpretation of contracts]; Civ. Code, § 1638.) “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.” (Civ. Code, § 1641.) Courts cannot “substantially alter
the agreement reached by the parties as clearly and explicitly stated in [their contract].”
(In re Marriage of Iberti, at p. 1440.)
We start with the plain language of the sections. Section 5.11.4 provides: “Except
as otherwise provided in this Agreement, the occurrence of transfers through a
community account or other form of community ownership or the mistaken commingling
or otherwise failing to segregate the separate property or separate income of either of us
by a third party alone shall not change or constitute a change of character of that property
or income, nor shall it constitute a transmutation of that separate property or income into
community, quasi-community, joint marital, or other similar type of property . . . .” The
section addresses the parties’ intended treatment of separate property that enters
community accounts or other forms of community ownership held by the parties, and
states that, absent an exception in the PMA, the separate property retains its separate
character. Such community accounts or forms of community ownership could include
bank accounts, business accounts, community investment accounts, or commonly held
real estate, to name but a few examples. The trial court, and Brian in this appeal, rely on
section 5.11.4 to support the conclusion that Brian’s separate property funds which were
contributed to the Joint Accounts simply “transferred through” the Joint Accounts and
therefore retained their separate property character.
Section 6.1 then states the parties shall establish jointly owned bank accounts
which “. . . will be our community property, owned one-half by each of us regardless of
the respective amounts contributed to the accounts by each.” The last sentence then
confirms “[t]o the extent that either of us contributes separate property funds to these
joint accounts, the separate property contributions shall become community property not
11
subject to reimbursement.” The plain language of the section expresses the parties’ intent
at the time they signed the PMA to make the Joint Accounts community property for all
purposes, regardless of the character of the funds contributed to the Joint Accounts or the
disposition of the funds thereafter.
Section 6.1 thus describes the parties’ intent to treat separate property funds
transferred into “jointly owned checking, savings, and/or brokerage accounts established
for their joint expenses” (i.e., the Joint Accounts) differently than the separate property
otherwise transferred “through a community account or other form of community
ownership” described in section 5.11.4. In other words, separate property funds
transferred through or commingled with community accounts retain their separate
property character, except if the parties agree otherwise. And as to the specifically
identified Joint Accounts, which constitute a defined subset of community accounts, in
section 6.1 the parties expressly agreed to treat those specific accounts differently (i.e., to
transmute all separate property contributions into the Joint Accounts into community
property.)
We respectfully conclude that the trial court’s interpretation of section 6.1 in effect
altered the PMA to create an exception in which Brian’s separate property “that passed
though” the Joint Accounts retained its separate property character if it was used for
separate property expenses. By adding this qualifier to section 6.1, the trial court
exceeded its interpretive authority. (Marriage of Iberti, supra, 55 Cal.App.4th at
p. 1437.)
In Marriage of Iberti, the parties entered into a marital settlement agreement
which terminated spousal support upon the occurrence of certain events, including when
wife stopped enrollment as a full-time student. A few years later, husband filed a request
to terminate spousal support because wife had dropped out of college. (Ibid.) Wife
opposed the termination, claiming she left college because of her mother’s mental illness
and subsequent suicide; she provided evidence that she returned to college thereafter.
12
(Id. at pp. 1437-1438.) The trial court granted husband’s request and terminated spousal
support. (Id. at p. 1438.) On appeal, wife argued the trial court should have “read into
the language” of the agreement an exception to termination of support “. . . if for some
reason [wife] is unable in good faith to attend college[.]” (Ibid.) The appellate court
applied the rules of contract interpretation and disagreed with wife. Instead, the appellate
court stated “[t]he agreement is not reasonably susceptible of wife’s proffered
interpretation. She asks this court to add qualifying language to the agreement. To do so
would substantially alter the agreement reached by the parties as clearly and explicitly
stated in the judgment. This we cannot do.” (Id. at p. 1440.)
Similarly, in Marriage of Corona (2009) 172 Cal.App.4th 1205, the trial court
ordered husband to pay a portion of wife’s income taxes based on the terms of the
parties’ marital settlement agreement. On appeal, husband argued he should not have to
pay any portion of wife’s income taxes engendered by her choice to file under the status
of “married filing separately” instead of “married filing jointly[,]” which, according to
husband, would have resulted in lower income taxes for wife. (Id. at pp. 1213, 1221-
1222.) Nothing in the parties’ settlement agreement, however, required wife to use a
particular tax filing status or to minimize her tax liability. (Id. at pp. 1221-1222.) The
appellate court rejected husband’s argument and concluded the requirements for finding
an implied contract provision were not met in the case, i.e., that the term is indispensable
to effectuating the parties’ intention, so obvious that it need not be expressed, that it
would have been addressed had it been called to the parties’ attention, that it is legally
necessary, and that the contract does not already address the subject of the implication.4
(Id. at p. 1222.) The appellate court affirmed the trial court’s order, stating it “ ‘[i]t is not
enough to say [a proposed implied provision] is necessary to make the contract fair, or
that it ought to have contained a stipulation which is not found in it, or that, without such
4
Brian does not claim the trial court’s orders added implied terms to the PMA but,
instead, argues the main issue is solely one of contract interpretation.
13
covenant, it would be improvident or unwise or would operate unjustly; for [parties] have
the right to make such contracts.’ [Citation.]” (Id. at p. 1223, quoting Cousins Inv. Co. v.
Hastings Clothing Co. (1941) 45 Cal.App.2d 141, 147.)
As these authorities illustrate, the purpose of contract interpretation is to determine
the parties’ intent at the time of formation based on the express words of the contract. “In
the construction of a statute or instrument, the office of the Judge is simply to ascertain
and declare what is in terms or in substance contained therein, not to insert what has been
omitted, or to omit what has been inserted; and where there are several provisions or
particulars, such a construction is, if possible, to be adopted as will give effect to all.”
(Code Civ. Proc., § 1858.)
Considered together, section 5.11.4 describes the general rule governing the
transfer of separate assets into community accounts, and section 6.1 describes an
exception to that rule. Section 5.11.4 applies to a broad category of community accounts
or other forms of community ownership. Section 6.1 is an exception to section 5.11.4, on
its terms addressing only the Joint Accounts, which according to the PMA, are jointly
owned checking, savings and brokerage accounts established by the parties for joint
expenses. Had the parties intended to create a further qualification that the character of
funds deposited into the Joint Accounts would depend on their intended use, or that
separate property funds deposited into the accounts would retain their separate property
character if used to pay separate property expenses, they had the ability to so state in the
PMA. The parties did not include any such conditional language. Instead, section 6.1
repeatedly states that the Joint Accounts are meant to be community property and all
contributions shall become community property without conditions or exceptions.5
5
We note the trial court found significant the placement of section 6.1 under the
section heading for “Expenses.” However, section 13.9 of the PMA specifically states
“Section headings are used for reference purposes only and should be ignored in the
interpretation of this Agreement.” Thus, to the extent the trial court considered the
14
Applying precepts to contract interpretation to the language of the relevant
sections, we construe them to mean that when Brian transferred separate property assets
into the Joint Accounts, they became community property.
2. Our Interpretation of Section 6.1 Does Not Render Other Provisions
of the PMA Meaningless
Brian argues in favor of the trial court’s interpretation, claiming the
straightforward interpretation we have applied would render section 5.11.3 and
section 5.11.4 of the PMA meaningless. We are not persuaded.
Section 5.11.3 deals with transfers of ownership between the parties during
marriage. Neither party contends ownership of the Joint Accounts was transferred to the
other during marriage. Both parties agree that the Joint Accounts, from inception and
throughout marriage, were community property. Accordingly, section 5.11.3 does not
affect our interpretation of section 6.1, nor does it have any relevance to determining the
ownership of the Joint Accounts.
Nor does our interpretation of the PMA’s provisions render section 5.11.4
meaningless. By adopting section 5.11.4, the parties expressly agreed to deviate from the
statutory presumption that commingled property is community in character. (See, e.g.,
Fam. Code, § 852, subd. (d) [exception to the transmutation statute for commingled
property]; In re Marriage of Mix (1975) 14 Cal.3d 604, 611 [“[The community property]
presumption applies to property purchased during the marriage with funds from a
disputed source, such as an account or fund in which one of the spouses has commingled
his or her separate funds with community funds”].) Section 5.11.4, however, is qualified:
“Except as otherwise provided in this Agreement. . . .” (Italics added.)
section headings dispositive of the parties’ intent when drafting section 6.1, we disagree
with its emphasis on them based on the express language of sections 5.11.4 and 6.1.
15
As we have explained, section 6.1 is such an exception “as otherwise provided in
the Agreement” to section 5.11.4.6 Section 5.11.4’s commingling provision does not
apply to section 6.1 because the parties expressly agreed in section 6.1 to transmute all
separate property contributed to the Joint Accounts to community property. On its terms,
section 6.1 thus precludes the commingling of assets described in section 5.11.4 because
all funds contributed to the Joint Accounts are or “shall become” community property.
Section 5.11.4, however, preserves the separate character of separate property
commingled or transferred through all community accounts and other forms of
community ownership not addressed in section 6.1.
Additionally, section 6.1 is the more specific provision controlling the character of
the jointly owned bank and brokerage accounts defined in that section, whereas section
5.11.4 addresses the treatment of the more general category of community accounts and
other forms of community ownership. “[A] specific provision relating to a particular
subject will govern in respect to that subject, as against a general provision, even though
the latter, standing alone, would be broad enough to include the subject to which the
more specific provision relates. [Citations.]” (Gen. Insurance Co. of America v. Truck
Insurance Exchange (1966) 242 Cal.App.2d 419, 426; Civ. Code, § 3534 [“Particular
expressions qualify those which are general”].) Accordingly, section 6.1 controls the
character of the assets in the Joint Accounts, not section 5.11.4.
When read as a whole, the PMA unambiguously declares the parties’ intent to
maintain their premarital property as separate property and to create new joint accounts
that would become their community property accounts to hold community property
6
At oral argument, Tabetha suggested that sections 5.11.4 and 6.1 should be
interpreted as essentially the same provision, except that section 5.11.4 addresses solely
the circumstance of a third-party transfer of separate property into the parties’ community
accounts. We are persuaded by the language of the section, with its use of the disjunctive
“or” throughout, that section 5.11.4 is not limited to the actions of third parties. Rather,
sections 5.11.4 and 6.1 address the character of separate property or income transferred
into community accounts.
16
funds, pay community property expenses and/or acquire community property assets
during marriage.
3. Our Interpretation is Consistent with the Law
Brian argues that as a court of equity, the trial court was bound to reach the result
in his favor. Brian claims that he was using his separate property to pay his separate
property expenses, although the monies passed through the Joint Accounts in the interim
for convenience. He thus contends that it would be inequitable to order him to reimburse
the community for expenditures he paid from his separate property.
Brian is correct that family law courts are courts of equity. (In re Marriage of
Calcaterra & Badakhsh (2005) 132 Cal.App.4th 28, 38.) “Equity, however, may not be
used to find liability where the result would nullify a contrary statute. ‘[A] court of
equity will never lend its aid to accomplish by indirect means what the law or its clearly
defined policy forbids to be done directly.’ [Citations.]” (Tuthill v. City of San
Buenaventura (2014) 223 Cal.App.4th 1081, 1088, quoting Jackson v. Torrence (1890)
83 Cal.521, 537.)
In this case, we are bound by the law to interpret and enforce the terms of the
parties’ contractual arrangements, and the law precludes us from applying equity to the
extent it would nullify the law on contract interpretation and enforcement. (In re
Marriage of Dawley (1976) 17 Cal.3d 342, 358 [“Having freely contracted [to the
definition of separate property in their premarital agreement] . . . the parties are bound by
their agreement.”].)
Further, our interpretation of the PMA is not inequitable. The parties—
each assisted by counsel—established the terms of their PMA and decided to deem all
funds contributed to specified joint accounts community property, owned one-half by
each party. This agreed-upon provision was neither unjust nor inequitable at the time
they agreed on the terms of the contract, nor throughout their marriage; divorce and
17
hindsight do not now make it so. Both parties were aware of the terms of the PMA
throughout their marriage. Brian had control over where he deposited his separate funds.
Had Brian intended to keep his separate property funds separate, he had the knowledge,
control and ability to do so during marriage by declining to deposit his funds into the
Joint Accounts.
For these reasons, we reverse the trial court’s findings and orders with respect to
the Joint Accounts.7
C. Substantial Evidence Supports the Trial Court’s Rulings Regarding the
Beverly Account and the Merrill Lynch Account
Tabetha claims the trial court “improperly disregard[ed] clear evidence” of a
transmutation of the Beverly Account and commingling of the Merrill Lynch Account.
As to the Beverly Account, Tabetha claims the trial court ignored trial exhibit 10
(the purported 2006 “signature card”) and trial exhibit 8 (the 2014 bank statement).
Tabetha claims the two exhibits indisputably show a transfer of ownership of the Beverly
Account from Brian’s premarital separate property to community property during
marriage.
Pursuant to section 5.11.3 of the PMA, “transfers of ownership must be evidenced
by a written instrument signed by the transferor.” Trial exhibits 8 and 10 do not show
any transfer of ownership of the Beverly Account signed by the transferor to Brian and
Tabetha jointly. Exhibit 8 is one page of a bank statement that is not signed by any party
and, thus, does not meet the requirements of section 5.11.3. Exhibit 10 is an untitled
document that, although containing the signatures of Brian, Tabetha and Brian’s
accountant, contains no terms that evidence a transfer of ownership of the account to
Brian and Tabetha as joint owners of the Beverly Account.
7
In light of our decision that all deposits into the Joint Accounts were transmuted
to community property, we do not address Tabetha’s claims that there was no evidence
presented at trial that Brian’s separate property retained its separate property character
because it simply “transferred through” the joint accounts.
18
At trial, it was undisputed that the Beverly Account existed before marriage and is
identified in the PMA as Brian’s separate property. Brian testified the account was set up
specifically for the construction of his Carmel Valley property, and is titled in the name
of his trust. Brian is the trustor and the sole trustee of the trust. After marriage, in 2006,
Brian added Tabetha and his accountant as signatories to the Beverly Account for
convenience. Brian testified he never changed ownership or title to the Beverly Account,
and the bank account was held by a trust, not an individual. To support his claim that the
Beverly Account remained titled under his trust account even after the 2006 “signature
card,” Brian admitted at trial certain wire transfer instructions to and from various banks
throughout 2004 to 2008 which the account name of the Beverly Account was listed as
“Brian L Hinman 2003 Trust Agreement.”8
Accordingly, substantial evidence supports the trial court’s findings that
(1) ownership of the Beverly Account did not transfer to Brian and Tabetha jointly during
marriage, (2) the Beverly Account is not a joint account under the definition of
section 6.1 of the PMA, and (3) the Beverly Account remained Brian’s separate property
throughout the marriage.
As to the Merrill Lynch Account, Tabetha claims the trial court erred by relying
only on Brian’s testimony that community property funds had not been commingled into
the account. Specifically, Tabetha claims the parties’ Quickbooks accounts listed
deposits in the Merrill Lynch Account categorized as Brian’s “salary” and thus, the
account was commingled, and Brian failed to meet his burden to show that it was not
commingled. Without citing to any legal authority, Tabetha claims Brian was required to
show “something visible, such as a record[,]” to rebut the entries stated in the
Quickbooks records, and that his testimony alone was insufficient. But it is well
established that substantial evidence can consist of the testimony of a single witness. (In
8
Based on Brian’s statements at trial, due to the passage of time, it appears most
of the files for the Beverly Account were no longer available from the bank.
19
re Marriage of Mix, supra, 14 Cal.3d at p. 614 [testimony from the wife to explain
tracing records is sufficient].)
At trial, Brian testified in detail as to the separate property source of each of the
contested deposits in the Merrill Lynch Account. He also explained the “salary”
categorized in the Quickbooks data related to the sale of 2Wire securities, which,
pursuant to section 5.4.5, is expressly defined as Brian’s separate property. The income
from the sale was identified by his former employer 2Wire as W-2 earnings for tax
purposes, and, accordingly, the Quickbooks data reflected the same tax accounting
categorization as “salary.” (See, e.g., In re Marriage of Brandes (2015) 239 Cal.App.4th
1461, 1480 [husband’s profit distributions from his separate property business, although
designated as W-2 income for tax purposes, remain husband’s separate property].) Brian
also testified that all community earnings during marriage were deposited into the Joint
Accounts, foreclosing the possibility of community property earnings being deposited in
the Merrill Lynch Account.
Based on Brian’s testimony, we conclude there was substantial evidence to
support the trial court’s findings that community funds had not been commingled into the
Merrill Lynch Account. As noted above, when we engage in a review under the
substantial evidence standard, “the pertinent inquiry is whether substantial evidence
supports the court’s finding—not whether a contrary finding might have been made.” (In
re Marriage of Fregoso & Hernandez (2016) 5 Cal.App.5th 698, 702.) Based on the
record before us, there is ample evidence to support the trial court’s findings the Beverly
Account did not become a joint account during marriage and the Merrill Lynch Account
was not a commingled community account. There is substantial evidence to support the
trial court’s findings that both accounts were Brian’s separate property throughout the
marriage. The trial court properly denied Tabetha’s claims for reimbursements for
expenses paid from those two accounts.
20
III. DISPOSITION
We reverse the August 24, 2022 findings and orders regarding the Joint Accounts.
The case is remanded for the trial court to determine the amount of reimbursements Brian
owes to the community consistent with our opinion.
Each party shall bear its own costs on appeal. (Cal. Rules of Court,
rule 8.278(a)(3), (5).)
21
_______________________________
Greenwood, P. J.
WE CONCUR:
_______________________________
Grover, J.
_______________________________
Lie, J.
H050359
Hinman v. Hinman