Trenk v. Soheili

Filed 12/21/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
JOSEPH TRENK et al., B295434
Plaintiffs and Respondents, (Los Angeles County
Super. Ct. No. PC058343)
v.
MARYAM SOHEILI et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Los
Angeles County. Melvin D. Sandvig, Judge. Affirmed.
Paul Kujawsky for Defendants and Appellants.
Joseph Trenk, in pro. per., for Plaintiffs and Respondents.
_________________________________
Maryam Soheili and Morteza Sohyly (Appellants) appeal
from a judgment quieting title to a house in Granada Hills owned
by respondents Joseph and Dinah Trenk (the Residence). 1
Joseph Trenk is a lawyer who previously represented Sohyly.
Sohyly sued him for malpractice, and the parties settled in 2003.
Joseph agreed to pay $100,000 and executed a promissory note
and a trust deed on the Residence to secure the obligation.
Sohyly’s sister, Maryam Soheili, was designated as the
beneficiary of the trust deed. Dinah did not sign the deed or the
note.
Joseph stopped regular payments on the note after 2003,
and by 2018 he still owed about $75,000. Sohyly (through his
sister) began nonjudicial foreclosure proceedings in January
2018. The Trenks then filed this lawsuit to clear title to their
house, alleging that the trust deed was no longer enforceable.
After a short trial, the trial court quieted title in the Residence in
favor of the Trenks, ruling that both the statute of limitations
and the Marketable Record Title Act (Civ. Code, § 880.020
et seq.) barred enforcement of the trust deed. 2
Appellants argue that the 60 year time period for
enforcement of a trust deed applies here under section 880.020,
subdivision (a)(2). The Trenks dispute that claim, but also argue
as an alternative ground for affirmance that the trust deed is
1 For clarity, we refer to Joseph and Dinah Trenk by their
first names. We refer to them collectively as the Trenks. No
disrespect is intended.
2 Subsequent undesignated statutory references are to the
Civil Code.
2
unenforceable because Dinah did not sign it. We agree with both
arguments.
A power of sale in a trust deed is enforceable even if the
statute of limitations has run on the underlying obligation.
Because the trust deed here did not state the last date for
payment under the promissory note, under section 882.020,
subdivision (a)(2) Appellants would have 60 years to exercise the
power of sale in the trust deed.
However, the power of sale is not enforceable for another
reason. The Residence presumptively is community property.
Appellants did not rebut that presumption at trial. Because
Dinah did not execute the trust deed, she has the power to void it.
Accordingly, we affirm the judgment.
BACKGROUND
1. The Settlement Agreement and Trust Deed 3
Sohyly sued Joseph in 2001 for legal malpractice. The
parties settled that action in 2003.
The written settlement agreement obligated Joseph to pay
Sohyly $100,000 over three years. Joseph was to pay $10,000
upon execution of the settlement agreement, and then $2,500 per
month for the next 36 months, beginning in May 2003.
Joseph also executed a zero interest installment note
(Note). The Note was for $200,000, but, like the settlement
agreement, specified 36 monthly payments of $2,500. The Note
stated that “on receipt of 36 payments hereunder, any and all
3We summarize the facts as contained in the trial court’s
statement of decision and the settled statement, supplemented as
appropriate by facts from the record that are not in dispute.
3
obligations evidenced by this note and trust deed shall be deemed
fully satisfied.” 4 The Note was not recorded.
The Note was secured by a deed of trust (Trust Deed) with
a power of sale for the Residence, where the Trenks had lived for
30 years. The Trenks originally took title to the Residence as
joint tenants and did not change the manner in which they held
title “at any time after the recording of the deed.”
The Trust Deed stated that it was provided for the purpose
of securing a promissory note “in the principal sum of
$200,000.00 . . . subject to settlement agreement.” The Trust
Deed did not refer to the payment schedule under the settlement
agreement or identify the date on which the Note was to be fully
paid. The Trust Deed identified Maryam Soheili as the
beneficiary.
Only Joseph executed the Trust Deed. Dinah testified that
she was unaware of the Trust Deed until she received a
“foreclosure letter” in January 2018.
2. Joseph’s Default and the Initiation of
Nonjudicial Foreclosure
Joseph made the initial $10,000 payment and six $2,500
payments from May 2003 through December 2003. He paid
4 The parties differed in their explanation for the $200,000
amount. Appellants claimed in the trial court that the additional
$100,000 was either a liquidated damages provision or an
“alternative manner of performance” in lieu of interest on the
$100,000 settlement amount. Joseph claimed that Sohyly told
him he wanted the $200,000 amount in the Note “as a means of
protecting the equity in the collateral put up to support the
payment of the settlement amounts.” The reason for the
$200,000 amount in the Note is not material to this appeal.
4
nothing more until October 2017, when he made on additional
payment of $2,500.
Joseph testified that Sohyly called him in October or
November 2017 asking for payment. Joseph offered to resume
monthly payments but Sohyly did not agree.
On January 4, 2018, Appellants recorded a notice of default
and election to sell under the Trust Deed. The notice stated that
Joseph owed $174,202 as of December 15, 2017.
The Trenks filed this action on March 5, 2018.
3. Proceedings in the Trial Court
The Trenks’ verified complaint alleged causes of action for
quiet title, slander of title, cancellation of deed, and fraud. The
complaint alleged that Joseph tendered $75,000 in full payment
on the Note on January 5, 2018 (the day after the notice of
default was recorded), but that Appellants refused the tender.
The complaint alleged that the four year statute of
limitations under Code of Civil Procedure section 337 had expired
on Joseph’s obligation under the Note. It also alleged that the
Trust Deed contains a “reference which makes the last date fixed
for payment of the debt or the performance of the obligation . . .
readily ascertainable.” 5
The Trenks first obtained a temporary restraining order
and then moved for a preliminary injunction to prevent the
trustee’s sale of the Residence. The trial court granted the
preliminary injunction, finding that there was a dispute about
5 As discussed further below, section 882.020, subdivision
(a)(1) provides that a power of sale may not be used to enforce a
lien after 10 years from the last date fixed for payment, if that
date is “ascertainable from the recorded evidence of
indebtedness.”
5
the amount of money that Joseph owed on the Note and that an
unjustified trustee sale would cause irreparable harm.
The case was tried to the court on October 15, 2018. The
court found against the Trenks on their fraud claim, but found in
their favor on their claims for quiet title and cancellation of the
Trust Deed.
In its statement of decision, the trial court set forth
findings that: (1) enforcement of the settlement agreement and
Note are barred by the statute of limitations; (2) enforcement of
the Trust Deed is barred by “both the statute of limitations and
the Marketable Record Title Act”; and (3) Appellants did not
commit fraud. The court also found that “[a]t all relevant times,
Plaintiffs Joseph Trenk and Dinah Trenk held title to the
property as joint tenants.”
DISCUSSION
1. The 60-Year Time Limit on Enforceability
Under Section 882.020, Subdivision (a)(2)
Applies to the Trust Deed
The Trenks argue that the Trust Deed was unenforceable
because the statute of limitations had already run on
enforcement of the Note. Alternatively, they argue that the 10-
year enforcement period under section 882.020, subdivision (a)(1)
applied to the power of sale in the Trust Deed. We disagree with
both arguments. 6
Under Civil Code section 882.020, “[u]nless the lien of a
mortgage, deed of trust, or other instrument that creates a
6 Because these arguments raise legal issues, we consider
them de novo. (See People ex rel. Lockyer v. Shamrock Foods Co.
(2000) 24 Cal. 4th 415, 432.)
6
security interest of record in real property to secure a debt or
other obligation has earlier expired pursuant to Section 2911, the
lien expires at, and is not enforceable by action for foreclosure
commenced, power of sale exercised, or any other means asserted
after, the later of the following times: [¶] (1) If the final maturity
date or the last date fixed for payment of the debt or performance
of the obligation is ascertainable from the recorded evidence of
indebtedness, 10 years after that date. [¶] (2) If the final
maturity date or the last date fixed for payment of the debt or
performance of the obligation is not ascertainable from the
recorded evidence of indebtedness, or if there is no final maturity
date or last date fixed for payment of the debt or performance of
the obligation, 60 years after the date the instrument that
created the security interest was recorded.” (Civ. Code,
§ 882.020, subd. (a)(1)–(2).) 7 Civil Code section 2911 in turn
provides that a “lien is extinguished by the lapse of time within
which, under the provisions of the Code of Civil Procedure . . .
[¶] 1. An action can be brought upon the principal obligation.”
Thus, the interplay between sections 882.020 and 2911
precludes an action for judicial foreclosure to enforce a lien on
real property after the statute of limitations on the secured
obligation has run. However, where a trust deed is involved,
section 2911 applies only to the lien that is “enforceable through
judicial foreclosure, and not the power of sale.” (Robin v. Crowell
(2020) 55 Cal. App. 5th 727, 750 (Robin).)
7 Section 882.020, subdivision (a)(3) also provides a means
to extend the applicable time period by 10 years by recording a
“notice of intent to preserve the security interest.”
7
Judicial enforcement of a lien and nonjudicial enforcement
though a power of sale are conceptually separate. A trust deed
provides a beneficiary with two means of enforcement. First,
under Code of Civil Procedure section 725a, a beneficiary under a
deed of trust has “the right to bring suit to foreclose . . . in the
manner and subject to the provisions, rights and remedies
relating to the foreclosure of a mortgage.” When exercising this
right, the beneficiary is enforcing a lien with “the same legal
effect as a traditional mortgage.” (Ung v. Koehler (2005) 135
Cal. App. 4th 186, 192 (Ung).)
Second, if a deed of trust includes a power of sale, a
beneficiary may exercise that power pursuant to the governing
statutes apart from the judicial process. (Ung, supra, 135
Cal.App.4th at p. 192.) In exercising that power, the beneficiary
is not enforcing a lien through judicial action but is invoking the
beneficiary’s authority to demand that the trustee of the property
sell the property for the beneficiary’s benefit. (Id. at p. 195; see
Grant v. Burr (1880) 54 Cal. 298, 301 (Burr).)
Before section 882.020 was enacted in 1982, it was well
established that the power of sale in a deed of trust was not
extinguished when the statute of limitations governing the
underlying obligation expired. (See Burr, supra, 54 Cal. at
p. 301; Ung, supra, 135 Cal.App.4th at pp. 192–193.) Indeed, the
rule was that “the statute of limitations never runs against the
power of sale in a deed of trust.” (Bank of Italy Nat. Trust & Sav.
Assn. v. Bentley (1933) 217 Cal. 644, 655; Ung, at pp. 192–193.)
The reason for this rule was the equitable principle that courts
should not help a debtor recover encumbered property unless the
debt is first paid. (Ung, at p. 193; Burr, at p. 301.) Consistent
with this principle, our Supreme Court interpreted section 2911
8
to apply only to judicial foreclosure actions to enforce a lien on
real property, and not to nonjudicial foreclosure under a deed of
trust. (Burr, at p. 301; Ung, at p. 193.)
In 1933 the Legislature adopted Code of Civil Procedure
section 725a, which authorizes judicial foreclosure under a deed
of trust. Our Supreme Court subsequently held that Civil Code
section 2911 precluded a trust deed beneficiary from pursuing
judicial foreclosure when the statute of limitations had run on
the secured obligation. (Flack v. Boland (1938) 11 Cal. 2d 103.)
But the court did not interpret Code of Civil Procedure section
725a to change the general rule that “the statute of limitations
does not run against the power of sale in a deed of trust.” (Flack,
at p. 106.)
Thus, prior to the enactment of section 882.020 in 1982,
judicial interpretation had established that the “lien” that is
extinguished under section 2911 upon expiration of the statute of
limitations is only the lien enforced through judicial foreclosure,
not the “lien” enforced by a power of sale. (See Ung, supra, 135
Cal.App.4th at pp. 195–196 [“the reference in section 2911 to a
‘lien’ could be regarded as addressing the type of security interest
created by a traditional mortgage but not that created by the
power of sale in a deed of trust”]; see Carson Redevelopment
Agency v. Adam (1982) 136 Cal. App. 3d 608, 610–611 [“Despite its
seemingly uncompromising language,” section 2911 has always
been interpreted in accordance with the principle that “the power
of sale under a deed of trust is not barred, or ‘never outlaws’ ”].) 8
8Section 882.020 in places uses the term “lien” more
broadly than just a lien that is subject to judicial foreclosure. In
9
The Legislature enacted section 882.020 in 1982 to change
this rule that a power of sale under a deed of trust “ ‘never
outlaws.’ ” (Legis. Com. com., Deering’s Ann. Code (2005 ed.) foll.
§ 882.020, p. 102.) The Legislature did so by establishing the
time limits set forth in subdivision (a) of that section. However,
in making this change, the Legislature gave no indication that it
intended to alter the long accepted judicial interpretation of the
explaining the time limits to enforce a deed of trust, the statute
states in relevant part that “[u]nless the lien of a . . . deed of trust
. . . has earlier expired pursuant to Section 2911, the lien expires
at, and is not enforceable by . . . power of sale exercised after . . .
the later of the following times.” (§ 882.020, subd. (a).) Thus, the
“lien” addressed in the second clause of subdivision (a) clearly
includes the lien enforced through a power of sale. The
subdivision does not expressly state that the “lien” addressed in
its first clause—i.e., the lien that could have “earlier expired
pursuant to Section 2911” —is more narrow and excludes the lien
enforced through a power of sale. However, when the Legislature
adopted section 882.020 the law clearly was that a power of sale
could not be extinguished through section 2911. We presume
that the Legislature was aware of this judicial interpretation of
section 2911 when it enacted section 882.020. (See In re Greg F.
(2012) 55 Cal. 4th 393, 407 [“The Legislature is presumed to be
aware of all laws in existence when it passes or amends a
statute”].) Nevertheless, the Legislature did not amend section
2911. We therefore also presume that the Legislature did not
intend to change the judicial interpretation of section 2911 by
enacting section 882.020. (Greg F., at p. 407 [“ ‘ “The failure of
the Legislature to change the law in a particular respect when
the subject is generally before it and changes in other respects
are made is indicative of an intent to leave the law as it stands in
the aspects not amended” ’ ”], quoting Estate of McDill (1975) 14
Cal. 3d 831, 837–838.)
10
scope of section 2911. Thus, every case that has considered the
issue has decided that section 882.020 preserved the rule that the
expiration of the statute of limitations on a secured obligation
does not extinguish the right to exercise a power of sale in a deed
of trust. (See Robin, supra, 55 Cal.App.5th at p. 750; Ung, supra,
135 Cal. App. 4th 195–196; Nicolopulos v. Superior Court (2003)
106 Cal. App. 4th 304, 309–311 (Nicolopulos); Miller v. Provost
(1994) 26 Cal. App. 4th 1703, 1707–1708 (Miller).)
The Trenks do not seriously contest this interpretation of
section 882.020. Rather, they argue that the 10-year limit on
enforceability under section 882.020, subdivision (a)(1) should
apply here because there is “direct privity and a familial
relationship between the original party to the note . . . ,
settlement agreement . . . and the deed of trust.” The Trenks
assert that the beneficiary of the Trust Deed—Sohyly’s sister,
Appellant Maryam Soheili—had “clear and actual notice of the
nature and maturity date of the underlying obligation on which
the [Trust Deed] was predicated.”
This argument fails to acknowledge the clear language of
section 882.020. Section 882.020 expressly states that the 10-
year time period applies only if “the final maturity date or the
last date fixed for payment of the debt or performance of the
obligation is ascertainable from the recorded evidence of
indebtedness.” (§ 882.020, subd. (a)(1), italics added.)
Alternatively, “[i]f the final maturity date or the last date fixed
for payment of the debt or performance of the obligation is not
ascertainable from the recorded evidence of indebtedness,” the
60-year period applies. (§ 882.020, subd. (a)(2), italics added.)
There is no ambiguity in this statutory requirement that a
document stating the last date for payment of the underlying
11
obligation must be recorded for the 10-year period to apply. The
requirement does not make any exception when there is actual
knowledge of that date by the party that is exercising a power of
sale. We must give effect to this requirement.
Cases that have considered the meaning of this provision
have come to the same conclusion. In Miller, the trustor of a deed
of trust argued that the 10-year period under section 882.020
applied because the recorded trust deed referred to an unrecorded
promissory note that contained the date for payment. (Miller,
supra, 26 Cal.App.4th at p. 1709.) The court rejected that
argument, concluding that “[t]he phrase ‘ascertainable from the
record’ in section 882.020 can only mean what it says; i.e., the
recorded document must contain the requisite information.”
(Ibid.) 9 The court explained that “the purpose of the statute is
not merely to give notice that the property is encumbered, but to
provide a specific date for the expiration of the encumbrance.”
(Miller, at p. 1709; accord, Nicolopulos, supra, 106 Cal.App.4th at
pp. 310–311; Ung, supra, 135 Cal.App.4th at pp. 201–204
[recorded document other than the notice of default itself must
state the due date of the underlying obligation to trigger the 10-
year period].)
Thus, actual notice of the date when an underlying
obligation is due is not sufficient to trigger the 10-year period
under section 882.020, subdivision (a). A recorded document
must reveal that date.
9 A 2006 amendment to section 882.020 replaced the phrase
“ascertainable from the record” with “ascertainable from the
recorded evidence of indebtedness.” (See Assem. Bill No. 2624
(2005-2006 Reg. Sess.) § 1.)
12
The Note here was not recorded. The Trust Deed was
recorded, but it did not state the date when the final payment
under the Note was due. The 60-year period to exercise a power
of sale under section 882.020(a)(2) therefore applied.
2. The Trust Deed Was Voidable Because Dinah
Did Not Execute It
The Trenks argue that if they owned their Residence as
community property, the Trust Deed was “subject to set aside”
because only Joseph executed it. (See Fam. Code, § 1102, subd.
(a) [“both spouses, either personally or by a duly authorized
agent, are required to join in executing an instrument by which
. . . community real property or an interest therein is . . .
encumbered”].) Appellants do not dispute the legal point, and
agree that whether the Trenks owned their Residence as
community property is the “critical question” in this appeal.
Appellants argue that the Residence in fact is not
community property. Appellants rely on the trial court’s finding
that “[a]t all relevant times, [Joseph and Dinah] held title to the
property as joint tenants.” They cite the law that a spouse’s
interest in a joint tenancy is separate property that he or she
may encumber without the other spouse’s consent. (Raney v.
Cerkueira (2019) 36 Cal. App. 5th 311, 320–321; Dieden v. Schmidt
(2002) 104 Cal. App. 4th 645, 650.)
Family Code section 760 provides that, “[e]xcept as
otherwise provided by statute, all property, real or personal,
wherever situated, acquired by a married person during the
marriage while domiciled in this state is community property.”
This provision establishes a presumption affecting the burden of
proof, which may be rebutted by a preponderance of the evidence.
13
(In re Marriage of Benson (2005) 36 Cal. 4th 1096, 1103; In re
Marriage of Valli (2014) 58 Cal. 4th 1396, 1400 (Valli).)
In In re Brace (2020) 9 Cal. 5th 903 (Brace), our Supreme
Court recently held that, for properties acquired after 1975, the
presumption established by Family Code section 760: (1) applies
to claims by third parties outside the context of marital
dissolution proceedings; and (2) prevails over another, more
general, statutory presumption that “[t]he owner of the legal title
to property is presumed to be the owner of the full beneficial
title.” (Evid. Code, § 662.) The court further held that, for
properties acquired after 1985, the “titling of a deed” as a joint
tenancy is not sufficient to show that the spouses intended that
writing to convert community property into separate property.
(Brace, at pp. 937–938.)
The court in Brace reached these conclusions in the course
of answering a question posed by the Ninth Circuit. Our
Supreme Court phrased that question as “whether the form of
title presumption set forth in Evidence Code section 662 applies
to the characterization of property in disputes between a married
couple and a bankruptcy trustee when it conflicts with the
community property presumption set forth in Family Code
section 760.” (Brace, supra, 9 Cal.5th at p. 911.)
This question arose in the context of determining whether a
residence that a married couple acquired as joint tenants was
community property and therefore within the reach of a
bankruptcy trustee in the husband’s bankruptcy case. (Brace,
supra, 9 Cal.5th at pp. 911–913.) Our Supreme Court concluded
that the form of the title as a joint tenancy did not rebut the
presumption under the Family Code that the residence was
community property. (Id. at p. 927.) The court also held that the
14
joint tenancy deed did not suffice to accomplish a transmutation
of the residence from community to separate property. Rather,
under Family Code section 852, subdivision (a), such a
transmutation requires a written declaration expressly stating
that “the character or ownership of the property is being
changed.” (Brace, at p. 938.)
The Trenks acquired the Residence in 1988 while they were
married. Thus, under the holding in Brace, the fact that the
Trenks took title to the Residence as joint tenants is not
sufficient in itself to show that Joseph had a separate interest in
the Residence that he could lawfully encumber with the Trust
Deed.
Appellants acknowledge the holding in Brace, but argue
that they met their burden to rebut the presumption that the
Residence was community property. They argue that, because
the trial court found that the Trenks “held title” to the Residence
as joint tenants, we must affirm if that finding is supported by
substantial evidence.
We agree that, had the trial court found that the Trenks
owned the Residence in joint tenancy as separate property, we
could reverse that finding only if it were unsupported by
substantial evidence. However, the trial court’s statement of
decision did not announce such a finding. Rather, as discussed,
the court found only that the Trenks “held title” to the Residence
“as joint tenants.”
Our Supreme Court made perfectly clear in Brace that the
community property presumption in Family Code section 760
cannot be rebutted simply by the form of title in which a married
couple holds property. (See Brace, supra, 9 Cal.5th. at p. 927
[“Family Code section 760 does not permit the community
15
property presumption to be rebutted simply by the manner in
which a married couple takes title”].) The court also clearly held
that a “joint tenancy deed, by itself, does not suffice” to prove that
a married couple has validly transmuted community property to
separate property. (Id. at p. 938.) Thus, the trial court’s finding
that the Trenks “held title” to the Residence as “joint tenants”
does not show that the court found that the Residence in fact was
separate property. At best, it is ambiguous on the point.
We resolve that ambiguity against Appellants. Ordinarily
the “doctrine of implied findings requires the appellate court to
infer the trial court made all factual findings necessary to
support the judgment.” (Fladeboe v. American Isuzu Motors, Inc.
(2007) 150 Cal. App. 4th 42, 58 (Fladeboe).) The doctrine is “a
natural and logical corollary to three fundamental principles of
appellate review: (1) a judgment is presumed correct; (2) all
intendments and presumptions are indulged in favor of
correctness; and (3) the appellant bears the burden of providing
an adequate record affirmatively proving error.” (Ibid.) Even
when a trial court issues a statement of decision, this doctrine
applies if the statement of decision is ambiguous and the
ambiguity was not brought to the trial court’s attention. (Id. at
pp. 59–60; Code Civ. Proc., § 634.)
The record here does not contain any objection or request
for clarification concerning the trial court’s finding on the issue of
title to the Residence. Arguably that finding was not “necessary
to support the judgment.” (Fladeboe, supra, 150 Cal.App.4th at
p. 58.) The trial court apparently based its ruling on the
erroneous belief that the statute of limitations barred nonjudicial
enforcement of the Trust Deed rather than on the conclusion that
the Residence was community property. Nevertheless, it is
16
Appellants’ burden to provide a record showing error. We decline
to resolve the ambiguity in the trial court’s statement of decision
against the prevailing parties, particularly on an issue on which
Appellants bore the burden of proof.
In any event, even if we were to assume that the trial court
found that the Trenks owned the Residence in joint tenancy as
their separate property, we would nevertheless affirm. The only
evidence in the record that could possibly support such a finding
is a portion of Joseph’s testimony. As described in the settled
statement, Joseph testified that he and Dinah “took title as joint
tenants” and that “he had not changed the manner in which he
and his wife held title to this property at any time after the
recording of the deed.”
But this testimony supports only the conclusion that the
Trenks held title to the Residence as joint tenants. As discussed
above, under the holding in Brace the manner in which a married
couple holds title to real property is not sufficient in itself to
rebut the statutory presumption that it is community property. 10
Alternatively, Appellants claim that the Trenks failed to
establish the necessary predicate facts for the community
property presumption to apply. Appellants point out that there is
no evidence in the record concerning the source of funds the
10 Appellants also cite a declaration that Joseph provided
in support of the preliminary injunction. The declaration states
that Dinah did not sign the Trust Deed and that “her interest” in
the Residence therefore cannot be foreclosed. This was not part
of the evidence at trial. In any event, the testimony does not
amount to a concession that Dinah’s “interest” in the Residence
was a separate joint tenancy interest rather than her interest in
her community property rights.
17
Trenks used to acquire the Residence. Appellants argue that the
presumption that an asset is community property only applies
when there is proof that the spouses acquired the asset with
community funds. Appellants cite Brace as authority for this
proposition.
The court’s decision in Brace does not support Appellants’
interpretation. The court did not create a new community
property presumption in that case, but simply held that the
statutory presumption in Family Code section 760 applies outside
the context of dissolution proceedings and takes precedence over
the statutory presumption from the form of title. (See Brace,
supra, 9 Cal.5th at pp. 928–929 [“In the absence of a statute that
expressly restricts the applicability of the community property
presumption to dissolution actions, we decline to engraft such a
major limitation onto Family Code section 760”].)
Under the plain language of Family Code section 760, the
presumption that particular property belongs to the community
applies whenever the property is “acquired by a married person
during the marriage while domiciled in this state.” The statute
does not contain any requirement that the source of funds used to
purchase the property must be proved before the presumption
applies. To the contrary: The law is clear that the presumption
may be rebutted with proof that separate funds were used to
purchase the property at issue. (See Brace, at p. 914 [“a spouse
may rebut the Family Code section 760 presumption by tracing
the source of funds used to acquire the property to separate
property”], italics added.)
It is true that the court’s opinion in Brace states in places
that the presumption under Family Code section 760 applies
when community funds are used to acquire property. (See, e.g.,
18
Brace, supra, 9 Cal.5th at p. 912 [“we hold that when a married
couple uses community funds to acquire property with joint
tenancy title on or after January 1, 1975, the property is
presumptively community property under Family Code section
760 in a dispute between the couple and a bankruptcy trustee”].)
However, those statements must be interpreted in the context of
the question that the court actually decided.
As discussed above, a key part of the court’s holding was
that the community property presumption under Family Code
section 760 could not be rebutted by the form in which title is
taken. (See Brace, supra, 9 Cal.5th. at p. 927.) The court did not
purport to add an additional requirement that the source of funds
used to purchase property during a marriage must first be proved
for the presumption to apply in the first instance. Indeed, the
court quoted Justice Chin’s concurring opinion in a prior case
explaining that “ ‘[t]he presumption, . . . that property acquired
during the marriage is community, is perhaps the most
fundamental principle of California’s community property law,’
reflecting the ‘ “general theory . . . that the husband and wife
form a sort of partnership, and that property acquired during the
marriage by the labor or skill of either belongs to both.” ’ ” (Brace
at p. 914, quoting Valli, supra, 58 Cal.4th at pp. 1408–1409 (conc.
opn. of Chin, J.), italics added.)
Nor did the court disapprove prior decisions holding that
the party who claims that property acquired during marriage is
separate property must prove that claim by a preponderance of
the evidence. (See Valli, supra, 58 Cal.4th at pp. 1399–1400; In
re Marriage of Ettefagh (2007) 150 Cal. App. 4th 1578, 1591.) We
reject Appellants’ suggestion that the court in Brace grafted
additional requirements onto the statutory language of Family
19
Code section 760 and overruled numerous cases interpreting that
section without expressly stating its intention to do so.
Moreover, there was no dispute in Brace that the property
at issue had been acquired with community funds. Thus, the
court did not need to decide whether the community property
presumption in section 760 depends upon the use of community
funds to purchase the property at issue. And, as discussed above,
it did not purport to do so. An opinion is authority only for those
issues that it actually considered or decided. (Rosen v. State
Farm General Ins. Co. (2003) 30 Cal. 4th 1070, 1076.)
In framing its holding by including the assumption that
property was acquired with community funds, the court in Brace
focused on the specific question that it decided. The court held
that the form of title does not itself rebut the community property
presumption in Family Code section 760, while avoiding any
diversion into the separate question whether the presumption
might be rebutted through the alternative means of tracing the
source of the funds. The court did not hold that tracing was
required before the presumption could be applied.
We therefore conclude that Appellants failed to rebut the
statutory presumption that the Trenks held the Residence as
community property. Because Dinah did not execute the Trust
Deed, that deed was voidable and the trial court properly
canceled it. 11
11 The Trenks make an additional argument that because
the Trust Deed cannot be enforced, the Note is an unsecured debt
that is barred by the statute of limitations. We do not reach the
statute of limitations issue. The trial court did find the statute of
limitations barred enforcement of the Note. However, that
20
DISPOSITION
The judgment is affirmed. Respondents are entitled to
their costs on appeal.
CERTIFIED FOR PUBLICATION.
LUI, P. J.
We concur:
ASHMANN-GERST, J.
HOFFSTADT, J.
finding is not relevant to this appeal. The only issue on appeal is
the enforceability of the Trust Deed. Because of our conclusion
that section 882.020 controls that issue, it is unnecessary to
decide whether the Note may be enforced as an unsecured debt.
Moreover, although it certainly appears from the record
that any potentially applicable statute of limitations would have
run since the final payment on the Note was due in May 2006,
Appellants have not sued on the Note. Appellants also did not
need to address any potential tolling arguments in this case
because they argued, successfully, that section 882.020 permitted
nonjudicial foreclosure on the Trust Deed regardless of whether
the statute of limitations barred enforcement of the Note. We
therefore leave the question whether the Note is enforceable for
future determination in the event that Appellants attempt to
collect on the Note as an unsecured debt.
21