Filed 6/16/22 Marriage of Cruz CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

In re the Marriage of MAGDALENA and 

ADRIAN ANTHONY CRUZ.

MAGDALENA CRUZ,

Respondent,

v.

ADRIAN ANTHONY CRUZ,

Appellant.

F080063

(Super. Ct. No. S1501FL628590)

OPINION

APPEAL from a judgment of the Superior Court of Kern County. Jose R. 

Benevides, Judge.

Law Offices of Edward J. Thomas, Edward J. Thomas and Paul R. Domen for 

Appellant.

Swanson O’Dell, and Jeremy D. Swanson for Respondent.

-ooOooAppellant Adrian Anthony Cruz (Adrian) appeals from an order (subject order) 

issued after entry of a judgment of marital dissolution from respondent Magdalena Cruz
2.

(Magdalena).1 The subject order denied Adrian’s request for reimbursement from the 

community estate of alleged separate property expenditures he made to preserve 

community property after the parties’ date of separation (Epstein credits, under In re 

Marriage of Epstein (1979) 24 Cal.3d 76, 84 (Epstein)). We affirm, in part, and reverse, 

in part.

FACTUAL AND PROCEDURAL BACKGROUND

Adrian and Magdalena, in consultation with their respective counsel, stipulated to 

numerous facts in advance of trial including, without limitation, the duration of their 

marriage. They married on February 18, 1995, and separated on November 27, 2008. On 

April 8, 2009, Magdalena petitioned for dissolution of her marriage to Adrian. A default 

judgment of marital dissolution was entered in the Tulare Superior Court on October 29, 

2009.

The default judgment contained provisions for child custody and visitation; child 

support; division of the parties’ assets, debts, and obligations; and equalizing payments. 

No spousal support was ordered but the Tulare Superior Court reserved jurisdiction to 

make such an order in the future.

Among the assets addressed by the default judgment was real property located in 

Terra Bella, California (36 Acres), which was gifted to the parties by Adrian’s parents in 

2003 and 2004. An appraisal for the 36 Acres was entered into evidence and indicated 

the actual size of the land is “32.78 assessed acres.” Although the parties and trial court 

have sometimes referred to the property as a 33-acre parcel, they have more frequently 

referred to it as the 36 Acres. Accordingly, we adopt the latter terminology (i.e., 36 

1

It is common practice to use the parties’ first names in family litigation “to both assist 

the reader and humanize a decision which seriously affects the litigants’ lives.” (In re Marriage 

of Schaffer (1999) 69 Cal.App.4th 801, 803, fn. 2.) We adhere to, but intend no disrespect by, 

this practice.
3.

Acres) to refer to the land. We note all the issues presented on appeal relate to the 36 

Acres.

In that regard, the default judgment provided:

“The [36 Acres] ... shall be sold and the net proceeds divided between the 

parties equally. Alternatively, [Adrian] shall have the option of purchasing 

[Magdalena’s] interest, upon price and terms as the parties mutually agree, 

said option to purchase to be exercised and completed within six (6) months 

from date of entry of Judgment herein.” 2

On or about February 9, 2010, Adrian and Magdalena stipulated to modify the 

default judgment. In accordance with the parties’ stipulation, the Tulare Superior Court 

entered an order to modify the default judgment (2010 Modification Order) which reads, 

in relevant part: “Parties agree to amend the filed judgment of 10/29/09 as follows: Page 

2.C #3: Parties agree not to sell the [36 Acres]. The court reserves jurisdiction over this 

piece of property.”

In 2010, the parties’ attempted to reconcile. Together, with their children, they 

moved to Bakersfield, California. However, the reconciliation was unsuccessful.

According to Adrian, the parties abandoned their efforts at reconciliation after a year or 

so. At trial, Magdalena contended “the parties separated for the final time in March 

2012.” Thereafter, all proceedings related to the parties’ divorce were held in the Kern 

Superior Court (trial court).

The 36 Acres

When the default judgment was entered, the 36 Acres were encumbered by a deed 

of trust dated May 10, 2007. The deed of trust secured a business line of credit (LOC) in 

2The default judgment also provided: “[Adrian], shall assume, pay and hold [Magdalena] 

harmless from any and all obligations incurred by [Adrian] after date of separation or held in his 

`name alone. [¶] ... All property transferred hereunder is transferred subject to all existing 

encumbrances and liens thereon, if any. The transferee of such property shall indemnify and 

hold harmless the other party from any claim or liability that the other party may suffer or may 

be required to pay on account of such encumbrance or lien.” Our decision in this matter does not 

rely on this provision of the default judgment.
4.

the amount of $55,000. Although the deed of trust was signed by both Adrian and 

Magdalena, the LOC was in Adrian’s name (and that of his sole proprietorship) only—

i.e., “Adrian A. Cruz, a sole proprietorship DBA Adrian A. Cruz Transport.” Adrian was 

the sole signatory on both the LOC-related agreements and the promissory note. The 

LOC agreement restricted Adrian’s use of LOC proceeds, as follows: “Use all Loan 

proceeds solely for Borrower’s business operations, unless specifically consented to the 

contrary by Lender in writing.” Adrian’s father, Victor Cruz, guaranteed Adrian’s 

payment of the LOC indebtedness.

The LOC was scheduled to mature on May 10, 2010. On or about June 11, 2010, 

Adrian entered into a new loan agreement (New Loan) for a term loan in the amount of 

$55,000 to pay off the LOC. Similar to the LOC, the New Loan documents and related 

promissory note were in the name of “Adrian A. Cruz” only; Adrian’s father guaranteed 

the New Loan; and use of the New Loan proceeds were restricted to “Borrower’s 

business operations” unless otherwise allowed by the lender. The New Loan, like the 

prior LOC, was secured by a new deed of trust on the 36 Acres signed by both Adrian 

and Magdalena.

Subsequent Proceedings Affecting the 36 Acres

The Parties’ Pleadings and the Trial Court’s Interim Ruling

On June 1, 2015, Magdalena filed a request for order (RFO) to modify the 

judgment. In it, Magdalena sought, among other things, an order to “enforce the sale of 

the [36 Acres], and the equalization payment, as ordered in the judgment.”

On March 30, 2017, Adrian filed an RFO seeking, among other things, 

reimbursement of costs paid by him in connection with the 36 Acres after the parties’

date of separation, and certain estimated costs to clean up the 36 Acres that had not yet 

been incurred or paid. Specifically, Adrian sought reimbursement for (1) payments made 

on the LOC and New Loan (LOC/New Loan Payments); (2) “payments made for waste 
5.

discharge required by the Tule Basin Water Quality Coalition” (Waste Discharge 

Payments); (3) “payments made to the Terra Bella Irrigation District” (Irrigation 

Payments); (4) payment of property taxes on the 36 Acres (Property Tax Payments); (5) 

the cost of a 2015 appraisal for the 36 Acres (Appraisal Costs); and (6) clean-up costs for 

the 36 Acres (Clean-Up Costs) (collectively, Claimed Expenses). Adrian contended that, 

once all of the Claimed Expenses are deducted from the appraised value of the 36 Acres, 

a total of $152,754 in “potential net sale proceeds” would be available to be “divided 

evenly between [Adrian] and [Magdalena] or $76,377.”

On April 28, 2017, the trial court issued an order setting a future evidentiary 

hearing on the issue of credits due to Adrian, if any. The court also ordered an interim 

payment of $75,000 to Magdalena for her “community interest” in the 36 Acres pending 

the hearing and without prejudice to the parties’ competing claims concerning credits and 

“final buyout amount” for the 36 Acres.3

The Parties’ Stipulations

In advance of the hearing on Adrian’s RFO, the parties entered into two 

stipulations that were accepted and approved by the trial court.

By its terms, the purpose of the first stipulation (First Stipulated Order) was “(i) to 

set forth the factual issues on which the parties agree for the purpose of limiting the trial 

time needed in connection with any future hearings ... and (ii) to define and narrow the 

issues in dispute.” It further provided: “Except as otherwise indicated, pursuant to 

section 622 of the California Evidence Code, the facts set forth in this First Stipulated 

Order shall be conclusively presumed to be true and may be considered as evidence in 

this proceeding.”

3Presumably, the interim payment of $75,000 was premised on Adrian’s representation 

that if all Claimed Expenses are reimbursed to him, each party would likely receive $76,377 

upon sale of the 36 Acres.
6.

The second stipulation (Second Stipulated Order) set forth the procedural status of 

the case and noted the trial court had bifurcated the trial. In it, the parties agreed to the 

introduction of various exhibits which are discussed below, as necessary.

Select Testimony

Testimony Re Use of the 36 Acres

Adrian testified as follows: He was in the trucking business and, as of the time of 

the first phase of trial, had owned a trucking company for “[w]ell over 20 years, about.” 

He has three trucks—the same number he had at the time of separation—that are used to 

pick up trailers owned by others. His company operates on his parents’ land situated 

across the street from the 36 Acres. His parents’ land has a repair shop used in 

connection with Adrian’s trucking business.

Adrian denied ever using the 36 Acres for purposes of running his company. He 

denied the 36 Acres were ever used for “farming or ranching purposes” while owned by 

his family or Adrian and Magdalena. When asked why it had not been so used, Adrian 

responded: “Couple of factors. The water issue is one of them. To establish an orchard, 

it would cost $100,000 as far as prepping the land, ripping, levelling it, irrigation lines, 

trees. We didn’t have the means to establish one; it would be very expensive.”

Adrian was asked: “Ignoring the mobile home, has [the 36 Acres] ever produced 

any income whatsoever?” Adrian responded, “No.” He testified he never received 

income from the 36 Acres.

Magdalena’s father, Zenon Rios Valle (Rios), was called to testify and 

contradicted much of Adrian’s testimony concerning use of the 36 Acres. He testified he 

worked seasonally for Adrian for approximately 10 years, from 2003 up until the end of 

2013. Before that, he worked for Adrian’s father as a mechanic. He then began working 

as a driver for both Adrian and Adrian’s father. During that time, Adrian had “about 20 

to 25 trailers, but [Rios thought] they had more sets of trailers, a set is two trailers 
7.

together.” Rios testified trailers would be parked on the 36 Acres, he parked them there 

himself for “two or three years,” and also retrieved trailers from the 36 Acres. He 

testified, “[W]henever something broke or when a truck turned over, the broken parts 

were taken [to the 36 Acres],” and, as recently as a year or less from the date of his 

testimony, he saw a trailer chassis on the 36 Acres as he drove by the property. He said 

parking the trailers on the 36 Acres was necessary because Adrian’s parents’ property 

had too many trees, parking was not always available, and maneuvering trailers was 

easier on the 36 Acres.

Adrian’s brother-in-law and former business partner, Richard Lopez, was called to 

the stand. Lopez testified he was married to Adrian’s sister but separated in 2013. Lopez 

worked for Adrian’s father between 1991 and 1995. He went into partnership with 

Adrian and Adrian’s father in or about late 2004. Their business (VCT) owned between 

24 and 27 trailers. They were in business until approximately 2013, at which point they 

sold their trailers.

Lopez testified he was familiar with the 36 Acres. He confirmed VCT “on 

occasion” used the 36 Acres to park trailers due to limited space on Adrian’s parents’

property. When asked, “Would it be fair to [say] you parked trailers on the 36 acres 

during the year 2013 at least once a week?” Lopez replied, “You know, I can honestly 

say I never really paid attention to what was there, but I know there were trailers there. 

[¶] Whether they were ours from our business, or my father-in-law’s [i.e., Adrian’s 

father], or perhaps some equipment Adrian might have owned, there was equipment 

parked there. I can say that.”

Turning his attention to 2013, Lopez was asked how often he would have occasion 

to drive by the 36 Acres. He testified, “Often I would go visit my in-laws every evening, 

most—probably four times, five times a week.” He confirmed that, on those visits, there 

were always trucks or trailers on the 36 Acres. With regard to broken or damaged 

trailers, Lopez confirmed the 36 Acres was used as a staging area for both VCT and 
8.

Adrian’s father’s business and that the repair shop mechanic would retrieve damaged 

trailers from the 36 Acres to bring into the shop for repairs. Adrian’s father did not 

charge VCT for using the 36 Acres in this manner. Of the 36 Acres, Lopez estimated 

three-quarters of an acre was used to park trailers.

When asked whether he observed “garbage, tires, old equipment, or things that 

were stored” on the 36 Acres, Lopez responded, “In the years I worked for my father-inlaw and years since, there were always trailers that belonged to my faither-in-law over 

there on that property. Just old equipment that was there.” He recalled that “tires and old 

scrap metal and things like that” were kept on Adrian’s parents’ property across from the 

36 Acres.

Testimony Re Use of the Proceeds of the LOC

Adrian was asked about the proceeds of the LOC. Adrian claimed the majority of 

the proceeds “went to paying debts, credit, and living expenses because we were living 

well beyond our means at the time.”

On cross-examination, Adrian admitted the LOC was in the name of his business, 

that he went to the bank without Magdalena to obtain the LOC, and he was truthful in 

telling the bank why he wanted the loan. He was asked the following questions and gave 

the following answers:

“Q. Did you tell [the bank] you were going to use part of those loan 

proceeds for a photography business for [Magdalena]?

“A. Like I said, I don’t remember what I told them specifically.

“Q. You don’t recall? You don’t recall whether you told them it 

was a split loan for two business[es] or just for your business?

“A. It was for my family.

“Q. It was for your family, all right. And that’s what you told them, 

I need a business loan for my family? Is that what you told them?

“A. To take care of my business and take care of my needs, yes.
9.

“Q. But you told them the business was Adrian Cruz Trucking, 

correct?

“A. They put it under that name.[4]

“Q. All right. Do you believe they put something on the loan that 

you did not tell them? They put a different business than what you told 

them you wanted? Is that what you’re telling me?

“A. No.”

Additional Testimony Re the 36 Acres

Adrian was also asked the following questions and gave the following responses:

“Q. Did you and [Magdalena], prior to the filing of this proceeding, 

ever discuss the possibility of dividing this property any other way than the 

net value after subtracting out the debt against the property?

“A. No.

“Q. Did you discuss the fact that even when you were buying her 

out, you were buying out for the net value on the difference between its fair 

market value and the property?”

“A. Yes.

“Q. Now, would it be fair to say that when you—now, after the 

default judgment was entered, the two of you entered into a subsequent 

order a few months later under which you agreed that you would not be 

required to sell the property at that point; do you recall that?

“A. Yes.

“Q. Why did you and she enter into that agreement?

“A. We entered into that agreement because I thought we were 

getting back together and have a family together; that’s why we entered 

it.[5]

4The LOC loan agreement listed the name of Adrian’s business as “Adrian A. Cruz 

Transport.”

5On cross-examination, Adrian admitted he testified at deposition that he asked 

Magdalena not to sell the 36 Acres because he wanted to buy her out of the property.
10.

“Q. The idea was you were saving the property in case you decided 

to build your dream house?

“A. Yes. [¶] ...[¶]

“Q. Was there ever any discussion that, hey, look, if we do this 

later, I don’t want any increase in the value of the land?

“A. No.

“Q. The understanding was always that whatever it sells for, it sells 

for? [¶] ... [¶]

“Q. Is that correct?

“A. Yes.”

Accepted Offers of Proof as to Rebuttal Testimony

Testimony in this matter was received by the trial court on March 22, 2018, and 

May 7, 2018. On December 11, 2018, counsel for each party made an offer of proof 

concerning their respective client’s testimony on rebuttal. The parties and court accepted 

the offers of proof as to the substance of each party’s rebuttal testimony but not as to the 

truth of the testimony, and no live testimony on rebuttal was received.

The following offer of proof was made on behalf of Magdalena: (1) “the 36 

[A]cres, was used [by Adrian] regularly and habitually for the storage of trailers, as well 

as equipment being repaired and other items related to the business”; (2) “the trailers ... 

stored there were not related to [Adrian’s] father’s business exclusively, but ... was 

related to [Adrian’s] business, including the Cruz trucking company, which is related to 

the loan that is held against the property”; (3) “it’s not true that the property was only 

used by [Adrian’s] father”; (4) “since the date of separation, [Magdalena] has had no 

control over it, has not had any use of it, received no rent, or payments of any kind or 

compensation for the use of that property”; (5) “the loan which is against the property 

was taken out for [Adrian’s] trucking business, and ... she received no portion of that 

money” for any use, “and ... that money was controlled and used by [Adrian] 
11.

exclusively”; (6) “[Adrian] told her that it was his business loan and his responsibility 

and that he would make the payments on that loan”; (7) Magdalena never received, or 

asked for in the past, “any of the bills that [Adrian] is claiming reimbursement for”; (8) 

Adrian “never offered to compensate [Magdalena] for use of the [36 Acres] such as onehalf of rental value or anything of that nature”; (9) Magdalena took no tax deductions 

“for the loan payments or any other business expenses based on that property since the 

date of separation, and ... [Adrian] has instead used the property as a business deduction 

on his taxes”; (10) “[Adrian] promised to make those loan payments and that it was his 

responsibility because it was related to his business”; and (11) “there was a mobile home”

on the 36 Acres, “the mobile home was rented,” rent payments “unknown to her” were 

made to Adrian’s parents, and “it was an income-generating property during the time ... 

they were married and then immediately thereafter.”

The following offer of proof was made on behalf of Adrian: (1) Adrian would 

deny he made promises “to pay for this or that”; (2) the 36 Acres was owned by Adrian’s 

parents “before it was gifted to the parties”; (3) “during the time [the 36 Acres] was 

owned by the parties, it was never farmed or rented to anyone,” “during marriage it was 

never farmed or rented to anyone by them,” and has not been farmed or rented to anyone 

since separation; (5) the 36 Acres “cannot be farmed ... without spending large sums of 

money ... to improve the property”; (6) Adrian believes the 36 Acres, in its current 

condition and as of the date of separation, could not be “rented to anyone for any price;”

(7) the mobilehome on the 36 Acres “was rented to someone known to [Adrian’s] 

parents” and the 36 Acres was given to Adrian and Magdalena “with the understanding 

that the parents would continue to rent the mobile home to that person and collect the rent 

on it”; (8) after the 36 Acres were gifted to Adrian and Magdalena, Adrian’s parents 

continued to receive rent; (9) the “renter eventually stopped paying and moved from the 

property”; (10) after the renter moved from the property, the “mobile home was 

uninhabitable,” and “the appraisal [of the 36 Acres] was based on the assumption the 
12.

mobile home would have to be removed from the property and it would have to be 

cleaned up.” Magdalena’s counsel objected to the latter statement concerning the 

appraisal. Adrian’s counsel agreed with the objection and stated “[t]he appraisal will 

speak for itself.”

The offer of proof made on Adrian’s behalf continued: (11) an estimated cost to 

clean up the 36 Acres was “a minimum of $26,000”; (12) “[t]o the extent the father’s 

trucking company or [Adrian’s] trucking company ever parked trailers or vehicles on the 

36 [A]cres, or used [it] to turn their trucks around, the land ... discussed during all of the 

testimony consisted of less than one acre on the corner of the 36 [A]cres”; (13) the area 

so used “is not paved, blacktopped or otherwise set up for the parking of vehicles, nor is 

it set up with any security arrangement to protect the vehicles like [his parents’] land”;

(14) “no one ever suggested [Adrian’s] father should be charged rent” for using the 36 

Acres to turn trucks around or park trucks; (15) the area of the 36 Acres Magdalena 

claimed was “occasionally used to turn a truck around or to store trailers on had no 

alternative use.”

The Trial Court’s Rulings and Subsequent Matters

On April 29, 2019, the trial court issued its ruling on Adrian’s claim for 

reimbursements of Claimed Expenses. On June 17, 2019, the trial court issued the 

subject order that adopted the language of the court’s April 29, 2019, ruling.

In the subject order, the trial court found, among other things, no evidence of any 

prior agreements between the parties to the effect that Adrian would not be reimbursed 

for Claimed Expenses, no evidence Adrian intended the Claimed Expenses to be a gift to 

Magdalena, and no evidence Adrian’s payment of Claimed Expenses was in the 

discharge of his duty to support Magdalena and their dependent children.

The trial court also found the testimony of Lopez and Rios to be credible. Their 

testimony largely established that Adrian, his father, and their separate and co-owned 
13.

businesses, “routinely parked” their trailers on the 36 Acres and used the 36 Acres to 

store their old equipment. The court found Adrian “to have been extremely untruthful in 

his testimony,” and wrote, “Other than matters [Adrian] conceded on cross-examination, 

the Court finds [Adrian’s] testimony not credible.” The court also found that “while 

[Adrian] may have ‘only’ used one acre out of the 36 available, he used as much of the 

36 [A]cres as he and his father needed to run their businesses.” Additional findings by 

the court will be discussed, as necessary, in the remainder of this opinion.

On July 5, 2019, Adrian filed a motion for new trial and statement of decision. A 

hearing on the motion was set for December 6, 2019. On October 1, 2019, Adrian timely 

appealed from the subject order.6 

DISCUSSION

I. Standard of Review

We review pure questions of law under a de novo standard of review. (Santa 

Barbara Pistachio Ranch v. Chowchilla Water Dist. (2001) 88 Cal.App.4th 439, 445.) 

“As to disputed factual issues, a reviewing court’s role is simply to determine whether 

substantial evidence supports the trial court’s findings of fact; ‘the reviewing court should 

not substitute its judgment for ... express or implied [factual] findings [that are] 

supported by substantial evidence.’” (In re Charlisse C. (2008) 45 Cal.4th 145, 159.)

“‘[W]e “view the evidence in the light most favorable to the prevailing party, 

giving it the benefit of every reasonable inference and resolving all conflicts in its 

favor ....” [Citation.] If the record demonstrates substantial evidence in support of the 

judgment, we must affirm even if there is substantial contrary evidence.’” (In re 

6Because the notice of appeal was filed more than 60 days following notice of entry of 

the subject order, this court issued an order directing Adrian to file within 20 days of the date of 

the order “a letter brief setting forth a jurisdictional basis for the appeal” and indicated failure to 

file the letter brief would be considered abandonment of the appeal. When Adrian failed to 

timely file the letter brief, the appeal was dismissed. Adrian moved to vacate the order of 

dismissal and, for good cause shown, the order was vacated, and the appeal was reinstated.
14.

Marriage of Brooks (2019) 33 Cal.App.5th 576, 589.) “Substantial evidence is evidence 

that is reasonable, credible, and of solid value.” (People v. Buell (2017) 16 Cal.App.5th 

682, 687.)

The issues on appeal are whether the trial court erred in denying Adrian’s request 

for Epstein credits (i.e., reimbursement for Claimed Expenses) and whether the court 

erred in offsetting credits by the value of [Adrian’s] exclusive use of the 36 Acres (i.e., 

Watts charges under In re Marriage of Watts (1985) 171 Cal.App.3d 366, 374 (Watts)). 

A trial court’s rulings on Epstein credits and Watts charges are reviewed for abuse of 

discretion. (In re Marriage of Mohler (2020) 47 Cal.App.5th 788, 797; In re Marriage of 

Oliverez (2019) 33 Cal.App.5th 298, 318–319.) “‘[I]t is generally accepted that the 

appropriate test of abuse of discretion is whether or not the trial court exceeded the 

bounds of reason ....’” (Bustos v. Global P.E.T., Inc. (2017) 19 Cal.App.5th 558, 563.)

II. The Trial Court Erred by Making Findings Contrary to Stipulated Facts

Adrian contends the trial court erred as a matter of law by finding the parties date 

of separation was November 2006 instead of November 27, 2008, as set forth in the First 

Stipulated Order. Magdalena does not contest the proposition and referenced November 

2008 as the parties’ date of separation in a declaration in support of her June 1, 2015, 

RFO. She does note, however, the court’s decision “did not hinge on the 2006 date of 

separation.” We agree the court erred in finding a date of separation different from that 

stipulated to by the parties. However, we conclude the error was not prejudicial.

“‘A stipulation is an agreement between attorneys for adverse parties relating to a 

matter involved in a judicial proceeding. It may relate to evidence or facts, and ... it 

results in a judicial admission removing issues from the case.’ [Citations.] There is a 

salutary reason for supporting stipulations against ensuing attack in most instances: 

‘Stipulations ... serve the convenience of the parties to litigation and often serve to 

simplify and expedite the proceeding [and] are supported by the policy of favoring 
15.

compromise in order to reduce the volume of litigation.’” (In re Marriage of Hahn

(1990) 224 Cal.App.3d 1236, 1239.)

“Generally, stipulations are binding upon the parties. ‘Unless the trial court, in its 

discretion, permits a party to withdraw from a stipulation [citations], it is conclusive upon 

the parties, and the truth of the facts contained therein cannot be contradicted. 

[Citations.]’ [Citation.] A stipulation is also binding on the court where the stipulation is 

not contrary to law, court rule or policy.” (Robinson v. Workers’ Comp. Appeals Bd.

(1987) 194 Cal.App.3d 784, 790; accord, In re Marriage of Oliverez, supra, 33 

Cal.App.5th at p. 302; Evid. Code, § 622 [“The facts recited in a written instrument are 

conclusively presumed to be true as between the parties thereto, or their successors in 

interest; but this rule does not apply to the recital of a consideration”].)

The parties expressly stipulated, “the facts set forth in this First Stipulated Order 

shall be conclusively presumed to be true and may be considered as evidence in this 

proceeding.” The next paragraph in the First Stipulated Order provides: “[Magdalena] 

and [Adrian] married on February 18, 1995, and separated on November 27, 2008, for a 

marriage of 13 years and 9 months.” The court erred by deciding this factual issue 

contrary to the parties’ stipulation.

However, “‘it is not sufficient merely to show error, but it is necessary to further 

show that the error was sufficiently prejudicial to justify a reversal.’” (Kyne v. Eustice

(1963) 215 Cal.App.2d 627, 635.) “[O]n appeal we review the decision of the trial court 

rather than its reasoning, and thus ‘... a ruling or decision correct in law will not be 

disturbed on appeal merely because it was given for the wrong reason. If correct upon 

any theory of law applicable to the case, the judgment will be sustained regardless of the 

considerations that moved the lower court to its conclusion.’” (Schabarum v. California 

Legislature (1998) 60 Cal.App.4th 1205, 1216.) As discussed below, the trial court had a 

sufficient evidentiary basis upon which to make its ruling even absent its erroneous 

finding as to the parties’ date of separation.
16.

III. Whether Adrian Is Entitled to Reimbursement for Claimed Expenses

A. The Purpose of the First Phase of Trial

Trial in this matter was bifurcated. The First Stipulated Order provided: “Since 

the signing of the [LOC], various expenses [i.e., the Claimed Expenses] have been paid 

by [Adrian] related to the 36 Acres.... The exact amount of [the Claimed Expenses] is in 

dispute, and this issue does not need to be resolved and is not being resolved by this First 

Stipulated Order.... Once it is determined what portion, if any, of the [Claimed 

Expenses] should be charged to [Magdalena], the parties are hopeful that they will be 

able to agree that a separate trial on this issue will not be necessary.”

The Second Stipulated Order provided, in part: “As part of that First Stipulated 

Order, this court has set a bifurcated trial in this matter .... The purpose of this bifurcated 

trial is to determine what items, if any, [Adrian] will be allowed to deduct from the value 

of the [36 Acres] to be divided as proper credits for [Claimed Expenses] which he has 

paid. The trial will not decide the value of those credits. At the conclusion of the trial, 

counsel will meet and confer on the value of any credits allowed and stipulate to any 

agreed totals. Any disputed totals will then be subject to the second part of the trial, 

which shall then be set, to determine the dollar amount of any allowed credits.”

Thus, the first phase of trial was limited to whether Adrian was entitled to Epstein

credits for the various categories of Claimed Expenses without deciding the value of 

those credits.

B. Epstein Credits and Watts Charges

“‘[A]s a general rule, a spouse who, after separation of the parties, uses earnings 

or other separate funds to pay preexisting community obligations should be reimbursed 

therefor out of the community property upon dissolution. However, there are a number 

of situations in which reimbursement is inappropriate, so reimbursement should not be 

ordered automatically. [¶] Reimbursement should not be ordered if payment was made 
17.

under circumstances in which it would have been unreasonable to expect 

reimbursement ....’” (Epstein, supra, 24 Cal.3d at p. 84.)

The Epstein court gave several examples of when reimbursement should not be 

ordered. They include “‘where there was an agreement between the parties the payment 

would not be reimbursed,’” “‘where the paying spouse truly intended the payment to 

constitute a gift,’” “‘where the payment was made on account of a debt for the 

acquisition or preservation of an asset the paying spouse was using and the amount paid 

was not substantially in excess of the value of the use,’” or “‘where the payment on 

account of a preexisting community obligation constituted in reality a discharge of the 

paying spouse’s duty to support the other spouse or a dependent child of the parties.’”

(Epstein, supra, 24 Cal.3d at pp. 84–85, italics added.)

A corollary to the rule set forth in Epstein was announced in Watts. The Watts 

court held a trial court has authority to order a spouse to reimburse the community estate 

when that spouse has had exclusive use of a community asset “between the date of 

separation and the date of trial.” (Watts, supra, 171 Cal.App.3d at p. 374.)

C. Adrian’s Burden to Demonstrate Entitlement to Epstein Credits

Evidence Code section 500 provides: “Except as otherwise provided by law, a 

party has the burden of proof as to each fact the existence or nonexistence of which is 

essential to the claim for relief or defense that he is asserting.” (Evid. Code, § 500.) 

Adrian argues it was Magdalena’s burden to demonstrate the use value of the 36 Acres 

and, having failed to do so, that value cannot be used to offset Adrian’s claim for 

reimbursement of the Claimed Expenses.

Adrian’s argument misses the mark. Although the parties agreed in the First 

Stipulated Order that the trial court would not decide the amount of any reimbursements 

ordered by the court, it was still Adrian’s initial burden to demonstrate he was entitled to 

reimbursement. (Evid. Code, § 500; In re Marriage of Braud (1996) 45 Cal.App.4th 797, 
18.

822–823.) We also note the first phase of trial was not established for the purpose of 

determining Watts charges. Accordingly, we do not view that avenue of inquiry 

foreclosed by the subject order. Because the First Stipulated Order barred the court from 

determining the amount of any reimbursements (i.e., Epstein credits) due to Adrian, it 

would be manifestly unfair to require Magdalena to introduce evidence in the first phase 

of trial in an effort to prove whether the use value was sufficient to offset such Epstein

credits.

Below, we examine the categories of Claimed Expenses and the evidence relevant 

to Adrian’s claim for reimbursement.

D. The LOC/New Loan Payments 

1. The Trial Court Did Not Violate Code of Civil Procedure Section 

580

Adrian contends the trial court erred in finding the LOC “was Adrian’s separate 

property obligation.” He contends Magdalena “acknowledged that the 36 Acres was 

community property and that it was subject to a secured loan that had been incurred 

during marriage and was presumptively community property.... As part of her proposed 

division of community property, [Magdalena] asked that the 36 Acres be sold and that the 

net proceeds (after paying off the secured loan) be divided equally between her and 

Adrian.... The [Tulare Superior Court] judge who signed the Default Judgment had no 

jurisdiction to do anything other than grant Magdalena the relief set forth in her Request 

for Default.” As a result, Adrian argues the Tulare Superior Court judge “could not have 

assigned the [LOC] that secured the 36 Acres to Adrian as his separate property. Any 

such order would have been void.”

In support of his contention, Adrian cites to subdivision (a) of section 580 of the 

Code of Civil Procedure, which provides, in relevant part: “The relief granted to the 

plaintiff, if there is no answer, cannot exceed that demanded in the complaint ....” He 

contends the trial court interpreted the default judgment in a manner that gave Magdalena 
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greater relief than she requested in her divorce petition, and argues, “a judge interpreting 

the default judgment cannot interpret it in a manner that grants the person who requested 

the default more relief than ... she requested.”

Adrian’s argument fails to consider that, when Adrian sought relief from the 

default and default judgment, the parties reached an agreement to modify the judgment as 

it pertained to the 36 Acres. The 2010 Modification Order provides, “Parties agree to 

amend the filed judgment of 10/29/09 as follows: Page 2.C # 3: Parties agree not to sell 

the 36 acres .... The court reserves jurisdiction over this piece of property.” This 

modification had the effect of removing from the default judgment the provision which 

provided the 36 Acres “shall be sold and the net proceeds divided between the parties 

equally.” Consequently, the trial court did not violate Code of Civil Procedure section 

580 by issuing the subject order.7

2. The Court’s Allocation of the LOC Debt to Adrian Was Within the 

Court’s Discretion and Is Supported by Substantial Evidence

Adrian contends both the trial court and Magdalena “appear to agree that Adrian 

has a presumptive right to be reimbursed for his [Claimed Expenses].” Adrian does not 

adequately explain the basis for this contention and does not cite to anywhere in the 

record from which we can draw this conclusion. Nothing in the record supports this 

contention. In fact, the purpose of the first phase of trial, as explained in the Second 

Stipulated Order, was “to determine what items, if any, [Adrian] will be allowed to 

7The First Stipulated Order provides that Adrian and Magdalena “agreed (and [the trial] 

court ordered) that, consistent with the terms of the Default Judgment, the 36 Acres either should 

be sold or [Adrian] should purchase [Magdalena’s] one-half interest in the property” (italics 

added). We do not interpret this statement as an attempt, or agreement, to reinstate the default 

judgment, and the trial court was not required to so interpret the statement. The trial court could 

infer this was merely an acknowledgment the original default judgment provided for the sale of 

the 36 Acres to Adrian or a third party, and that, contrary to the 2010 Modification Order, the 

parties now agreed such a sale should occur.
20.

deduct from the value of the [36 Acres] as proper credits for expenses which he has paid”

(italics added).

Family Code section 2625 provides: “Notwithstanding Sections 2620 to 2624, 

inclusive, all separate debts, including those debts incurred by a spouse during marriage 

and before the date of separation that were not incurred for the benefit of the community, 

shall be confirmed without offset to the spouse who incurred the debt.” “The court has 

jurisdiction to order reimbursement in cases it deems appropriate for debts paid after 

separation but before trial.” (Id., at § 2626.) By giving a trial court authority to order 

reimbursement where “it deems appropriate,” the Legislature has authorized the trial 

court to exercise its discretion in deciding such matters.

Although the trial court erroneously determined the parties’ date of separation was 

November 2006, Magdalena is correct in arguing the subject order “did not hinge on the 

2006 date of separation.” Specifically, the trial court also found “the [LOC] was obtained 

‘solely for [Adrian’s] business operations’ ‘to support [Adrian’s] business activities’; that 

Adrian “was the only signatory on the [LOC]”; the LOC was guaranteed by Adrian’s 

father; and Magdalena “did not benefit from [the LOC] or its subsequent conversion to 

[the New Loan].” Substantial evidence supports these findings.

The LOC loan documents were signed only by Adrian. Those documents list 

Adrian and his sole proprietorship as the only debtors on the LOC. In the offer of proof 

accepted by Adrian’s attorney, Magdalena’s testimony was that she received none of the 

LOC money, that it was used and controlled by Adrian exclusively, and that she never 

received any tax benefit from the money. Such testimony supports an inference that 

Magdalena and the community estate never benefitted from the LOC. Moreover, the 

proffered testimony, if credited by the trial court, established that Adrian admitted and 

acknowledged his sole responsibility for the LOC since it was related to his business.

Although Adrian contended the LOC proceeds “went to paying debts, credit, and 

living expenses because we were living well beyond our means at the time,” the trial 
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court found such statements self-serving and not credible. Moreover, to credit such 

testimony would be to countenance a fraud on the LOC lender, which limited use of the 

funds to Adrian’s “business operations, unless specifically consented to the contrary by 

Lender in writing.” There is no evidence in the record the lender permitted alternative 

uses of the LOC proceeds.

The trial court’s determination that Magdalena (and, consequently, the community 

estate) did not benefit from the LOC is supported by substantial evidence. The trial

court’s decision to deny Adrian’s claim for reimbursement of LOC/New Loan Payments 

was within the bounds of reason and was not an abuse of discretion.

E. Waste Discharge Payments, Irrigation Payments, and Property Tax 

Payments

With regard to the Waste Discharge Payments, Irrigation Payments, and Property 

Tax Payments, the trial court expressly found “[Adrian] incurred these expenses for the 

preservation of the 36 acre lot and the amounts paid were not substantially in excess of 

the value of his use of the 36 acres.” We are bound by the trial court’s findings of fact if 

supported by substantial evidence. (Dwight v. Leonard (1959) 174 Cal.App.2d 199, 202.)

We conclude the trial court’s statement that the aforementioned payments were 

incurred for the preservation of the 36 Acres is supported by substantial evidence only as 

to the Property Tax Payments and Waste Discharge Payments. However, we conclude 

Adrian is not entitled to Epstein credits for the Irrigation Payments for reasons different 

from those stated by the court.

As to the finding that the amounts paid for these various categories of 

expenditures were not substantially in excess of the value of Adrian’s use of the 36 acres, 

the finding is supported by substantial evidence only as to the Waste Discharge 

Payments. But once again, for reasons different from those stated by the trial court, we 

conclude Adrian is not entitled to Epstein credits for the Waste Discharge Payments. 
22.

Finally, with respect to Property Tax Payments, contrary to the trial court’s 

determination, we conclude Adrian is entitled to Epstein credits.

We discuss these determinations in further detail below.

1. Property Tax Payments

Substantial evidence supports the finding that Property Tax Payments benefitted 

the 36 Acres. A property may be encumbered by tax liens and ultimately may be lost due 

to a failure to pay real property taxes. (McMaster v. City of Santa Rosa (1972) 27 

Cal.App.3d 598, 601–602.) Thus, it was necessary to pay the real property taxes assessed 

against the 36 Acres to avoid such adverse consequences.

We question whether Adrian would be entitled to Epstein credits for all such 

Property Tax Payments. For reasons not disclosed by the record, there were numerous 

penalties assessed against the property. However, we are mindful of the fact the trial 

court was not determining the amount of Epstein credits to which Adrian was entitled. 

“Family law courts are courts of equity.” (In re Marriage of Mohler, supra, 47 

Cal.App.5th at p. 796.) We presume, therefore, if the parties are unable to reach an 

agreement on the amount of Epstein credits due Adrian for Property Tax Payments made 

by him, the court will evaluate the propriety of awarding Adrian Epstein credits for 

payments made toward tax penalties in the second phase of trial.

2. Irrigation Payments

The documentary evidence concerning Irrigation Payments includes two customer

transaction summaries from the Terra Bella Irrigation District (TBID) for Irrigation 

Payments made in connection with the 36 Acres. The first summary, for the period 

November 30, 2009, through June 29, 2010, is for an account in the name of Victor Cruz.

The second summary, for the period June 29, 2010, through July 26, 2017, is for a 

different account in the name of “Adrian Cruz #1.” Also included is an unpaid bill for 

Irrigation Payments dated November 26, 2015.
23.

The First Stipulated Order contains the following statement concerning the 

Irrigation Payments: “Since the signing of the [LOC], various expenses have been paid 

by [Adrian] related to the 36 Acres. Basically, these expenses consisted of ... the 

required payments to the [TBID] after the Default Judgment was entered.” No further 

information concerning the Irrigation Payments is contained in the First Stipulated Order. 

The Second Stipulated Order merely provides for the admission of the TBID customer 

transaction summaries and the unpaid bill into evidence. No further information 

concerning the Irrigation Payments is contained in the Second Stipulated Order. No 

testimony was provided concerning the Irrigation Payments, the TBID, or the necessity of 

incurring debt to the TBID for irrigation.8

To the extent the land has been irrigated or otherwise used TBID water after the 

parties’ date of separation, the evidence does not support a finding that Magdalena (or the 

community estate) will benefit from the use of TBID water.

On this record, we conclude substantial evidence does not support the trial court’s 

determination that the Irrigation Payments were incurred for the preservation of the 36 

Acres. It was Adrian’s burden to demonstrate the right to Epstein credits in connection 

with this expense. (Evid. Code, § 500; In re Marriage of Braud, supra, 45 Cal.App.4th at 

pp. 822–823.) He did not meet that burden.

Although the trial court gave a different reason for denying Adrian’s claim for 

reimbursement of Irrigation Payments, we conclude the court reached the right result. 

8We also note the appraisal that was introduced into evidence, and relied on by Adrian 

for a portion of his claim for reimbursement of Claimed Expenses, provides, in part: “The [36 

Acres] is not leased. There is a lease market for dry land farming. These leases are typically for 

one crop season with the lessor receiving 15–25% of the crop or net income. With the current 

lack of district water deliveries, the [36 Acres] would not be leased for irrigated farming.” It also 

provides, in part, “The Sales Comparison Approach is considered to be an applicable approach to 

value the [36 Acres]. In the case of the [36 Acres], the location, water availability, and soils type 

are the determining factors.” The appraisal value of the 36 Acres was based on the Sales 

Comparison Approach and appears to indicate the value of the 36 Acres is negatively affected by 

the lack of TBID water.
24.

Consequently, we affirm the court’s determination regarding Irrigation Payments. (See 

Schabarum v. California Legislature, supra, 60 Cal.App.4th at p. 1216.)

3. Waste Discharge Payments

The documentary evidence submitted in support of Adrian’s claim for 

reimbursement of Waste Discharge Payments included (1) a final notice from the Central 

Valley Regional Water Quality Control Board (Water Board). The notice states, in part, 

“On 19 September 2013, the [Water Board] approved the Waste Discharge Requirements 

General Order ... for Growers within the Tulare Lake Basin Area that are Members of a 

Third-Party Group. All commercial irrigated lands within the Tulare Lake Basin Area 

are now required to get regulatory coverage through one of the options described below,”

and (2) a 2014 application for new membership within the Tule Basin Water Quality 

Coalition (TBWQC), indicating a charge of $100 for the application.

As with the Irrigation Payments, no substantive information (aside from that 

contained in the aforementioned notice and application) is contained in the record. It 

appears, however, membership in the TBWQC is a reasonably necessary expense. Given 

the de minimis amount of the cost of the application, we cannot say the trial court erred in 

finding that the use value of the 36 Acres offset the cost of the application. We will 

uphold the trial court’s decision with regard to Waste Discharge Payments.

F. Clean-Up Costs

With regard to Clean-Up Costs, the subject order provides: “The 36 [A]cres was 

appraised ‘under the Hypothetical Condition that the farmstead area has been cleaned up 

and the property is ready for development to permanent buildings. The farmstead 

includes abandoned tires and equipment. The hypothetical buyer would require the seller 

to remove these items or discount the purchase price for clean-up ....’ [Citation.] 

[Adrian] provided one estimate for the clean up costs and seeks ‘reimbursement’ for onehalf the costs. [Citation.] [Adrian] has not actually incurred any of [the] out-of-pocket 
25.

expenses set forth in the estimate. Moreover, there is no evidence that he will in fact 

incur said expense. The [trial court] therefore denies his request to be reimbursed for the 

estimated [C]lean[-U]p [C]osts.”

Our review of the record reveals the trial court was correct in its assessment that 

Adrian failed to produce evidence to demonstrate he actually incurred Clean-Up Costs or 

that he will, in fact, incur those costs.

We also note the record is unclear as to the basis of the agreement (assuming there 

is one) for the sale of Magdalena’s interest in the 36 Acres. For example, the evidence 

does not actually disclose the parties agreed to a $280,000 valuation—although one 

might be inclined to presume such an agreement based on the parties’ briefing. In 

addition, the record does not disclose the parties’ agreed that any agreed-upon purchase 

price would be reduced by the cost of removing tires and equipment from the property. 

The fact that the parties agreed to have this latter issue adjudicated by the trial court 

suggests no agreement on the issue was ever reached.

The First Stipulated Order merely states, “[Adrian and Magdalena] eventually 

agreed (and [the trial] court ordered) that, consistent with the terms of the Default 

Judgment, the 36 Acres either should be sold or [Adrian] should purchase [Magdalena’s] 

one-half interest in the property. For the purpose of resolving this issue, the 36 Acres 

was appraised by Ronin Consulting, Inc. A copy of the appraisal ... valued the 36 Acres 

at $280,000 .... Based on the Appraisal, [Adrian] purchased [Magdalena’s] one-half of 

the parties’ community property interest in the 36 Acres on May 10, 2017, subject to this 

motion for credits, and with title not changing until the credits issue was resolved by the 

court.” Neither this stipulation, nor the evidence introduced at trial, supports an inference 

there was an agreement to offset any sale price by the Clean-Up Costs.

Code of Civil Procedure section 909 empowers this court to make factual findings 

in bench trials based on evidence introduced at trial so long as we give deference to the 

trial court’s findings that are supported by substantial evidence. (Code Civ. Proc., § 909; 
26.

People v. Werner (1960) 184 Cal.App.2d 441, 443–444 [decided under former § 956a of 

Code Civ. Proc., predecessor statute to § 909 of Code Civ. Proc.].) It may be inferred 

that the tires and abandoned equipment located on the 36 Acres are the property of 

Adrian’s business. Adrian’s business, his father’s business, and VCT all used the 36 

Acres for business purposes, including storage. We find the tires, old equipment, and 

other items located on the 36 Acres are a byproduct of Adrian’s business and his family’s 

and partnership’s coordinated business operations. The Clean-Up Costs are properly 

charged to Adrian’s business and do not support an award of Epstein credits.9

We will affirm the subject order as it pertains to the Clean-Up Costs.

DISPOSITION

The subject order with respect to its determination that Adrian is not entitled to 

Epstein credits for Property Tax Payments made after the parties’ date of separation, is 

reversed. The Property Tax Payments were necessary to preserve the 36 Acres. In all 

other respects, the subject order is affirmed. In the interest of justice, each party shall 

bear their own costs on appeal.

PEÑA, Acting P. J.

WE CONCUR:

MEEHAN, J.

DE SANTOS, J.

9We note the estimate for Clean-Up Costs also includes removal of the mobilehome on 

the 36 Acres. However, the hypothetical condition in the appraisal that called for removal of 

abandoned tires and equipment did not call for removal of the mobilehome.