Steed v. Steed CA2/6

Filed 1/25/21 Steed v. Steed CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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
SECOND APPELLATE DISTRICT
DIVISION SIX
ERIN E. STEED, 2d Civ. No. B300907
(Super. Ct. No. 18FL-0394)
Plaintiff and Appellant, (San Luis Obispo County)
v.
AARON B. STEED,
Defendant and Respondent.
In this interlocutory appeal, wife challenges the trial
court’s rulings that the termination of the parties’ premarital
agreement was procured by undue influence. We affirm.
FACTS
Aaron Steed (Husband) started his business, Meathead
Movers (Meathead), with his brother Evan in 1997 when
Husband was a junior in high school. Meathead became a
successful moving company.
Husband and his future wife Erin Steed (Wife) began
dating in 2005. Wife had a bachelor’s degree in accounting and
business. She became a certified paralegal and worked for law
firms in that capacity. Husband had taken a few college courses
but never earned a degree.
In 2006, Wife began working in accounting for Meathead.
The parties became engaged later that year. The parties
executed a premarital agreement (PMA). In negotiating and
executing the PMA, each party was represented by counsel.
The PMA provided that neither party would obtain a
community property interest in the other party’s separate
property by virtue of their efforts during marriage. At the time
the parties executed the PMA, Husband’s separate property,
including Meathead, was valued at $3 million. Wife had very
little separate property.
The parties married in 2008. Wife became the controller of
Meathead. When the company needed lawyers with different
specialties, she developed a “legal bench.” She managed the large
legal and human resource problems for the company.
Husband discussed all business and personal decisions
with Wife. He relied on her business and legal education and
experience. He would immediately sign whatever documents she
instructed him to sign. He placed trust and confidence in her.
Meathead’s income continued to increase each year.
Between 2008 and 2012, Meathead enjoyed significant growth in
gross income, size, and number of employees.
During the marriage, Wife would complain that she was
not building anything. She was just an employee building
Husband’s business. She wanted to terminate the PMA, but he
refused.
On April 23, 2012, Wife presented Husband with a
termination of the PMA form. She did not seek advice of legal
counsel. Instead, she downloaded the form from a legal website.
2.
She filled out the form and walked it eight feet from her desk to
Husband’s desk at the Meathead offices. She handed the
document to Husband, who immediately reached for a pen to sign
it. She told him to stop and read it. He read the document and
signed it. Then Wife and two witnesses signed it. The entire
transaction took 10 to 15 minutes.
Husband testified he did not want to terminate the PMA.
He denied ever seeing, reading, signing, or discussing the PMA
termination document.
In April 2015, the parties, assisted by counsel, executed
estate planning documents, including an agreement transmuting
all their property into community property. Husband believed
the transmutation agreement terminated the PMA.
The parties’ marriage broke down and they separated June
26, 2018.
PROCEDURE
Husband filed for dissolution of marriage and requested a
bifurcated trial on the validity of the PMA termination and
transmutation agreements. The trial court bifurcated the trial on
the validity of the PMA termination agreement.
RULING
The trial court found that Husband signed the PMA
termination; the presumption of undue influence attached; and
Wife failed to rebut the presumption because she did not fully
and fairly disclose the relevant facts to ensure Husband
understood the effect of the PMA termination agreement.
We granted Wife’s motion to appeal the interlocutory
ruling. (Fam. Code, § 20251; Cal. Rules of Court, rule 5.392.)
1 All statutory references are to the Family Code.
3.
DISCUSSION
I
Standard of Review
The existence and scope of a fiduciary duty are questions of
law that we review de novo. (In re Marriage of Kamgar (2017) 18
Cal.App.5th 136, 144.) Whether a fiduciary duty has been
breached is a question of fact that we review under the
substantial evidence rule. (Ibid.) Under the substantial evidence
rule, we view the evidence in a light most favorable to the trial
court’s ruling, resolving all conflicts in the evidence and all
reasonable inferences that may be drawn from the evidence in
favor of the decision. (Ibid.)
II
Presumption of Undue Influence
Section 721, subdivision (b) provides in part, “[I]n
transactions between themselves, spouses are subject to the
general rules governing fiduciary relationships that control the
actions of persons occupying confidential relations with each
other. This confidential relationship imposes a duty of the
highest good faith and fair dealing on each spouse, and neither
shall take any unfair advantage of the other.”
If one spouse secures an advantage from a transaction with
the other spouse, a presumption that the advantaged spouse
exercised undue influence arises. (In re Marriage of Fossum
(2011) 192 Cal.App.4th 336, 344.) The advantaged spouse must
prove by a preponderance of the evidence that the disadvantaged
spouse’s action was freely and voluntarily made, with full
knowledge of all the facts, and with a complete understanding of
the effects of the transaction. (Ibid.) Upon such failure of proof,
the transaction will be set aside. (Ibid.)
4.
Wife attempts to convince us that she derived no advantage
from the termination of the PMA. She argues the termination
did not transfer a single dollar to her. That may be true, but it
made possible the transfer of potentially millions of dollars to
her. Prior to the PMA termination agreement, Wife complained
to Husband that she was only an employee of Meathead, that she
was not building anything of her own, and that she was just
building Husband’s business. She wanted to terminate the PMA
so that she could obtain an interest in the business. That
interest would come out of Husband’s interest in Meathead. Such
business opportunities have monetary value.
Wife’s reliance on In re Marriage of Brandes (2015) 239
Cal.App.4th 1461 is misplaced. In Brandes, wife did not receive
an apportionment of the increase in the value of husband’s
separate property business because the increase was due to
factors other than community efforts. (Id. at p. 1477.)
Wife argues Brandes shows it was “pure speculation” that
the community would ultimately benefit from the termination of
the PMA, and that this “hunch” cannot be conflated with unfair
advantage.
But Wife was intimately familiar with Meathead and its
potential for growth. She must have been aware that it was
highly likely she would profit at Husband’s expense from the
termination of the PMA. It was Wife who wanted to terminate
the PMA so that she could have part of the business.
Wife argued there is no evidence to support the trial court’s
finding that with a stroke of the pen she was enriched by millions
of dollars. But the evidence shows that Meathead was a
successful and growing business. If Wife was not enriched by
5.
millions of dollars, she was at least enriched by a substantial
amount. It is irrelevant by how much she was enriched.
It is absurd to argue that it was “pure speculation” or a
“hunch” that Wife would benefit. Even a “possible benefit” raises
the presumption of undue influence. (In re Marriage of Mathews
(2005) 133 Cal.App.4th 624, 630.) Here the trial court could
reasonably conclude Wife’s benefit was more than possible; it was
highly likely.
The trial court correctly found that there is a presumption
of undue influence.
III
Failure to Rebut Presumption
The trial court found that Wife failed to rebut the
presumption of undue influence. Wife’s challenge to the finding
is based on a view of the evidence in a light most favorable to
herself. But that is not how we view the evidence.
In viewing the evidence, we look only to the evidence
supporting the prevailing party. (GHK Associates v. Mayer
Group, Inc. (1990) 224 Cal.App.3d 856, 872.) We discard
evidence unfavorable to the prevailing party as not having
sufficient verity to be accepted by the trier of fact. (Ibid.) Where
the trial court or jury has drawn reasonable inferences from the
evidence, we have no power to draw different inferences, even
though different inferences may also be reasonable. (McIntyre v.
Doe & Roe (1954) 125 Cal.App.2d 285, 287.) The trier of fact is
not required to believe even uncontradicted testimony. (Sprague
v. Equifax, Inc. (1985) 166 Cal.App.3d 1012, 1028.)
Because we disregard evidence that does not support the
judgment or order as not credible, it is virtually impossible for
6.
the party with the burden of proof to succeed in attacking the
sufficiency of the evidence on appeal.
Wife’s argument that there was no substantial evidence of
undue influence misses the point. Undue influence is presumed.
There need not be any evidence of actual undue influence for
Husband to prevail.
In any event, there is substantial evidence when viewed in
a light most favorable to the order from which the trial court
could reasonably conclude there was actual undue influence.
Wife is a college graduate with legal training. Husband is a high
school graduate with no legal training. Wife complained that she
was only an employee and had no share in Meathead. She had
access to a “bench” of attorneys; yet she selected to prepare the
PMA termination agreement herself, thus depriving Husband of
the benefit of legal counsel. She handed the agreement to
Husband at work without warning. Although she told him to
read it, she did not advise him to seek legal counsel before
signing. The entire transaction lasted only 10 to 15 minutes.
The agreement was entirely one-sided. She gave up nothing to
obtain a share in a successful business.
DISPOSITION
The judgment (order) is affirmed. Costs on appeal are
awarded to respondent.
NOT TO BE PUBLISHED.
GILBERT, P. J.
We concur:
YEGAN, J. PERREN, J.
7.
Erin M. Childs, Commissioner
Superior Court County of San Luis Obispo
______________________________
Herring Law Group, Ruston T. Imming; Garrett C. Dailey
for Plaintiff and Appellant.
Barnick | Hodges Law Corporation, Whitney Northington
Barnick; Helbert & Bodney, David A. Bodney for Defendant and
Respondent.
8.