Court Opinion

ID: 4855415
Source: CourtListenerOpinion
Date Created: 2021-08-24 19:06:42.763192+00
Date Added: 2024-06-11T08:11:49.224176
License: Public Domain

Filed 8/24/21
                        CERTIFIED FOR PARTIAL PUBLICATION *

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                               THIRD APPELLATE DISTRICT
                                         (San Joaquin)
                                               ----

Estate of BENNY M. WALL, Deceased.                                   C087730

CINDY L. WALL,                                                 (Super. Ct. No.
                                                           STKPROPH20170000427)
                  Petitioner and Respondent,

        v.

TIMOTHY WALL et al.,

                  Objectors and Appellants.

      APPEAL from a judgment of the Superior Court of San Joaquin County,
Lesley D. Holland, Judge. Affirmed.

      Kroloff, Belcher, Smart, Perry & Christopherson, Allison Cherry Lafferty and
Rebecca H. Sem for Objectors and Appellants.

       Blewett & Allen, Inc., Shari L. Allen-Garibaldi and Jason Edmond Chong for
Petitioner and Respondent.

* Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified
for publication with the exception of Parts II and III of the Discussion.

                                                1
         After her husband Benny Wall (decedent) died, petitioner Cindy Wall (wife)
petitioned the probate court to determine that a home, titled in decedent’s name, was
community property. Decedent’s children, objectors Timothy Wall and Tamara Nimmo
(the children) objected unsuccessfully. On appeal, the children contend the trial court
erred in (1) determining that the Family Code section 760 community property
presumption prevailed over the Evidence Code section 662 form of title presumption; (2)
failing to consider tracing evidence rebutting the community property presumption; (3)
determining the Family Code section 721 undue influence presumption prevailed over the
Evidence Code section 662 form of title presumption; and (4) applying the undue
influence presumption where there was no showing of unfair advantage.
         While the first two contentions have merit, we will affirm the judgment.

                       FACTS AND HISTORY OF THE PROCEEDINGS
         After decedent died intestate in 2016, wife petitioned the probate court to
determine a home, titled in decedent’s name, was community property. The children
objected, and a trial was held. At the trial, testimony was provided by the children,
decedent’s sister, wife, a mortgage broker, and a real estate agent.

         The Children’s Testimony

         As testified to by the children, decedent was born in 1939. He retired in 2001, and
he has two children from his first marriage.
         Around 1998, decedent’s home was foreclosed, and he moved into a home owned
by one of his children and her husband. Decedent was charged a significantly reduced
rent, allowing him to repair his credit and save. In 2006, decedent inherited over $44,000
from his father and told his family he wanted to invest and save the money to buy a
house.

                                               2
       Decedent met wife in 2007. They married in 2008. Decedent believed his prior
wife took advantage of him, but he said he had learned from the experience and would
not be taken advantage of again.
       When decedent and wife were married, she moved in with him in the home owned
by decedent’s child. Decedent and wife did not commingle assets, and they held no joint
accounts or assets.
       In 2010, decedent and wife decided to buy a home. Decedent took title to the
home, as “Benny M. Wall, a married man as his sole and separate property.” And he
used $99,205.83 from his separate property account for the down payment and financed
the balance of the $134,000 purchase price.
       During the marriage, decedent’s income came only from separate property
sources: pension benefits earned pre-marriage and social security benefits. He deposited
that income into his bank account and made mortgage payments from that account.
       In 2013, decedent refinanced the home. He did not include wife on the loan, and
the 2013 deed of trust listed the borrower as, “Benny M. Wall, a married man as his sole
and separate property.”
       The children add that, “[t]his would have been a perfect time to include [wife] as a
borrower on the loan and add her to title, had [decedent], in fact, intended to transmute
the Property. . . .”
       The children also testified that the decedent and wife’s marriage was not close.
They were “more like roommates than spouses.” They also testified that when decedent
died unexpectedly in 2016, wife refused to allow the children to access decedent’s safe.
She told them she did not find a will when she drilled out the safe the day after his death.

       Decedent’s Sister’s Testimony

       Decedent’s sister testified to decedent receiving an inheritance from his father, and
that the marriage was not close. She also testified that decedent told her that decedent’s

                                              3
wife had signed a deed indicating she had no interest in the home and decedent wanted
his assets to go to his children.

       Wife, the Mortgage Broker, and the Real Estate Agent’s testimony

       Wife testified that in 2008, she wrote decedent a check for $3,500 to use toward
the future purchase of a home. In 2010, she and decedent decided to buy the home as
joint owners. They applied for a loan as joint borrowers but were denied because she still
had a home mortgage from her previous marriage.
       The mortgage broker testified that when decedent and wife were denied a loan, she
suggested decedent apply for the loan himself and add wife’s name to the title later. She
recalled that decedent and wife agreed to do this.
       Decedent then applied as the sole borrower and was approved. Afterward, the
mortgage broker sent a congratulations card to decedent and wife congratulating them on
their purchase. The mortgage broker testified she understood they both were owners.
       The real estate agent also testified that he understood that decedent and wife were
buying the house together, though he did not know how they took title.
       Wife testified that a few days after they signed documents at the title company, the
escrow officer called and said wife needed to sign another document. Wife was told it
was a normal procedure though she did not know what “quitclaim” meant, and no one
had explained it to her. Decedent encouraged her to sign the quitclaim and said he would
add her to the title later. Wife and decedent then went to the title office and wife signed
the quitclaim deed, whereby she “remise[d], release[d], and forever quitclaim[ed]” the
home to decedent.
       Wife testified that after signing, decedent told her the quitclaim meant nothing,
and she was the owner of the property. Throughout the marriage, decedent reiterated that
she was an owner and it was “their home.” In 2013, she sold her home from her prior
marriage, and wrote a check to decedent for half the sale proceeds, $2,500, plus $100 to

                                             4
help pay for dump fees. She said it “should be used towards the purchase of their future
home.” The check memo line said “loan/help.”
       After the home was purchased, wife paid for improvements; she also painted,
worked to improve the landscaping, and installed fixtures. Decedent contributed to the
home from his separate property funds, paying for a new roof, a cement patio, and new
carpet. They split household expenses, with decedent paying the power and trash bill,
and both of them purchased groceries.
       Wife testified that she helped because she believed she was an owner of the home.
Also, her son and nephew rented rooms in the house, and she and decedent agreed she
was entitled to half the rent. But for convenience, checks were written to decedent, who
deposited them into his separate property bank account. Wife testified that decedent’s
actions led her to believe she was financially contributing to paying down the mortgage
on their home and was an owner of the property.
       Wife also testified her marriage to decedent was close and intimate.

       The Trial Briefs

       In her trial brief, wife argued that two Family Code presumptions should apply,
sections 760 and 721. Family Code section 760 provides that property acquired during a
marriage is community property. Wife argues that Family Code section 721, subdivision
(b) provides that there is a rebuttable presumption of undue influence when one spouse
obtains an advantage over another in a community property transaction. The children
maintained that the presumption in Evidence Code section 662 applies: absent clear and
convincing proof to the contrary, ownership is as set forth in the legal title.

       The Probate Court’s Ruling

       The probate court granted wife’s petition. It explained that historically, marital
property characterization turned on form of title, unless ownership interests were

                                              5
otherwise established. That form-of-title presumption is now embodied in Evidence
Code section 662.
       But while Evidence Code section 662 remains viable for civil matters, a different
analysis now applies to marital estates. The court cited Justice Chin’s concurrence In re
Marriage of Valli (2014) 58 Cal.4th 1396, 1413-1414 (Valli), which explained: “the
statutes in the Family Code governing community property, including the section 760
presumption, are sufficient unto themselves. . . . Future courts resolving disputes over
how to characterize property acquired during the marriage in an action between the
spouses should apply the community property statutes found in the Family Code and not
section 662.”
       The probate court acknowledged the dispute was not between spouses but
concluded Valli still applied because the children essentially stood in the shoes of
decedent. Accordingly, the community property presumption of Family Code section
760 applied.
       As to Family Code section 721, the court noted that spouses are subject to rules
governing fiduciary relationships. And where an interspousal or community transaction
advantages one spouse over another, a presumption of undue influence arises. Citing
Lintz v. Lintz (2014) 222 Cal.App.4th 1346, 1353 (Lintz), the court concluded that where
Evidence Code section 662 and Family Code section 721 conflict, Family Code section
721 prevails.
       The court went on to conclude that neither presumption had been rebutted. As to
Family Code section 760, the court called evidence of tracing “interesting” but not
dispositive. It reasoned that because source of funds is insufficient to overcome a form of
title presumption, it could not overcome a community property presumption either. The
court further found “no persuasive evidence of any communicated intention, agreement,
or common understanding between the spouses sufficient to overcome the presumption
that [the home] was intended to be a community asset.” Wife, by contrast, presented

                                             6
credible evidence, including the real estate professional, that she and decedent were
buying the home together.
         And as to Family Code section 721, the probate court found the presumption
applied to the purchase of the home, the decision to title it in decedent’s name, and the
signing of the quitclaim. It further found the children failed to show by a preponderance
of the evidence that the purchase and titling of the home were transactions freely and
voluntarily entered into with full knowledge of the relevant facts.

                                        DISCUSSION
         On appeal, the children challenge that ruling, advancing four contentions in
support: (1) the Evidence Code section 662 presumption and not the Family Code
section 760 presumption applied; (2) if Family Code section 760 applied, the probate
court erred in finding it had not been rebutted; (3) the Evidence Code section 662
presumption and not the Family Code section 721 presumption applied; and (4) even if
the Family Code section 721 presumption applies in the probate context, it was
inapplicable here without a showing of unfair advantage.
         As we explain, while the first two contentions have merit, we conclude the Family
Code section 721 presumption was properly applied, and substantial evidence supported
the conclusion that it had not been rebutted. On that basis we affirm the judgment.

                                              I

                  Family Code Section 760 and Evidence Code section 662

         The children first contend Evidence Code section 662, and not Family Code
section 760, should apply when determining the character of real property in a probate
matter. They also challenge the probate court’s reliance on Valli. This contention is well
taken.
         Family Code section 760 and Evidence Code section 662 give rise to conflicting
presumptions in this case. The former provides that: “Except as otherwise provided by

                                              7
statute, all property, real or personal, wherever situated, acquired by a married person
during the marriage while domiciled in this state is community property.” (Fam. Code,
§ 760.) The latter states: “The owner of the legal title to property is presumed to be the
owner of the full beneficial title. This presumption may be rebutted only by clear and
convincing proof.” (Evid. Code, § 662.)
       Here, the probate court relied on Justice Chin’s concurrence, in Valli, in
determining the community property presumption prevails. At issue, in Valli, was
whether a husband’s life insurance policy, purchased with community property and put in
the wife’s name, was community or separate property upon dissolution of the marriage.
(Valli, supra, 58 Cal.4th at p. 1399.) Valli held the Evidence Code section 662 form of
title presumption does not apply in a dissolution proceeding when it conflicts with
transmutation statutes, and thus the policy was community property despite being in the
wife’s name. (Id. at p. 1406.) Justice Chin’s concurrence further explained the role of
the form of title presumption in an action between spouses: “In my view, as in the view
of all amici curiae to appear in this case—law professors and attorneys specializing in the
field—the Family Code section 760 presumption controls in characterizing property
acquired during the marriage in an action between the spouses.” (Id. at p. 1408, italics
added.)
       Recently, in In re Brace (2020) 9 Cal.5th 903, our Supreme Court concluded
Valli’s holding that the community property presumption prevails is not limited to
dissolution actions, though it reiterated, “form of title controls at death. . . .” (Id. at
pp. 927-928, 931.) The Brace court considered whether Family Code section 760
prevailed over Evidence Code section 662 in disputes between a married couple and a
bankruptcy trustee. (Id. at p. 911.) Concluding it did, the court explained, “we see no
basis in the text, purpose, or history of Family Code section 760 to confine Valli’s
holding in this way. It would carve a major hole in the community property system to
hold that Evidence Code section 662, a general statute that addresses the import of legal

                                                8
title—and not Family Code section 760, a statute that specifically addresses the
characterization of property acquired during marriage—governs the characterization of
property acquired during marriage for all purposes other than divorce.” (Id. at pp. 928.)
But the court went on to explain that its approach “does not undermine the stability of
title in the context of probate,” adding that that “[c]ourts have consistently held that for
property titled in joint tenancy, the form of title controls at death.” (Id. at p. 931.) And it
added: “Our decision today does not alter the well-established default rule that form of
title controls at death. . . .” (Id. at p. 934.)
       In light of Brace, we think the probate’s court’s reliance on Valli was misplaced.
Justice Chin’s concurrence pertained to actions between spouses. And while the probate
court’s reasoning that the children stand in the shoes of the decedent has some intuitive
appeal, it collides with the Brace court’s teaching that form of title controls at death. We
therefore conclude the probate court erred in determining Family Code section 760
prevailed over Evidence Code section 662 in this probate action. And because we so
hold, we need not address the children’s argument that, even if Family Code section 760
prevailed and the community property presumption did apply, the probate court erred in
its determination of whether the presumption was rebutted.

                                                   II

                  Family Code section 721 and Evidence Code section 662

       The children next contend the probate court erred in determining Family Code
section 721 applies over Evidence Code section 662 in the probate context, where the
alleged influencer is not alive to testify. In support they cite Estate of Levine (1981)
125 Cal.App.3d 701, 705 (Levine) (superseded by statute on other grounds as noted by In
re Marriage of Weaver (1990) 224 Cal.App.3d 478, 481.) They also challenge the
probate court’s reliance on Lintz, which they maintain is distinguishable.

                                                   9
       Family Code section 721, subdivision (b) provides in pertinent part: “in
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.”
       As the children implicitly concede, Lintz stands for the proposition that section
721 can apply in the probate context. There, the decedent died at age 81, while married
to the defendant. (Lintz, supra, 222 Cal.App.4th at p. 1350.) Leading up to his death,
decedent executed several amendments to his trust, giving defendant more of his assets
upon his death, transmuting property to community property, disinheriting his oldest
children from a prior marriage, and empowering defendant to disinherit his youngest
child and to leave unspent residue to her children. (Id. at p. 1350.) The decedent’s
children successfully sued the defendant for claims including fiduciary abuse of an elder,
breach of fiduciary duty, conversion, constructive trust, and undue influence. (Ibid.)
Affirming the decision, the appellate court explained that Family Code section 721 was
applicable, and while there was no indication the probate court had applied that
presumption, the presumption nevertheless should have been applied both to the
transmutation of the separate assets as well as to the trust granting defendant a virtually
unfettered life estate in decedent’s property, disinheriting two of the decedent’s children,
and empowering defendant to disinherit another and pass the assets to her own children.
(Id. at p. 1353.)
       Here, the children attempt to distinguish Lintz, arguing there the alleged influencer
was alive to provide testimony to rebut the presumption of undue influence, while, here,
the decedent is the alleged influencer and cannot testify. They add that Lintz did not
consider the applicability of the Evidence Code section 662 form of title presumption.

                                             10
       But nothing in Lintz suggests Family Code section 721’s applicability turns on the
ability of the alleged influencer to testify. Further, the children have pointed to no
authority for that proposition, nor are we aware of any.
       Further, while the Lintz court did not consider the intersection of Evidence Code
section 662 and Family Code section 721, other courts have. Those courts make clear
that when the two presumptions conflict, the undue influence presumption prevails. (In
re Marriage of Delaney (2003) 111 Cal.App.4th 991, 998 [“In cases such as this,
involving interspousal property transactions, the ‘irreconcilable conflict’ between the two
presumptions established by section 721 and Evidence Code section 662 has been
resolved in favor of section 721, based on the intent of the Legislature in enacting
fiduciary protections for interspousal transactions and general rules of statutory
construction”]; In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 345 [“the form of
title presumption simply does not apply in cases in which it conflicts with the
presumption that one spouse has exerted undue influence over the other”]; In re Marriage
of Brooks & Robinson (2008) 169 Cal.App.4th 176, 190 fn 8. (abrogated by Valli, supra,
58 Cal.4th at p. 1405 on other grounds) [“The form of title presumption does not apply
when it conflicts with the presumption of undue influence by one spouse over the other”];
In re Marriage of Haines (1995) 33 Cal.App.4th 277, 283 [“section 662 should not apply
in marital proceedings when such a conflict appears”]; see also In re Marriage of Bonds
(2000) 24 Cal.4th 1, 28 [“It long has been the rule that ‘[w]hen an interspousal
transaction advantages one spouse, “[t]he law, from considerations of public policy,
presumes such transactions to have been induced by undue influence” ’ ”].)
       Finally, in Levine, upon which the children rely, Family Code section 721 was
never considered. While the Levine court explained, “[f]or the purpose of determining
the character of real property upon the death of a spouse, there is a rebuttable
presumption that the character of the property is as set forth in the deed,” undue influence
was never alleged nor implied (the decedent in Levine had wanted his home to be

                                             11
considered community property but held it in joint tenancy for convenience). (Levine,
supra, 125 Cal.App.3d at pp. 704-705.) Levine is therefore of no help. (See B.B. v.
County of Los Angeles (2020) 10 Cal.5th 1, 11 [“ ‘ “cases are not authority for
propositions not considered” ’ ”].)
       We therefore conclude the probate court properly concluded the Family Code
section 721 undue influence presumption applied.

                                             III

                          Application of Family Code Section 721

       Finally, the children contend that if Family Code section 721 is applicable in this
context, it still should not apply here where there is no showing of unfair advantage.
They reason that the presumption has largely applied where the disputed property was
once characterized as community property or was purchased or financed with community
funds. But here, the home was always the decedent’s separate property, and was
purchased with his separate funds and titled in his name alone, and the status as separate
property was never changed during the marriage.
       The presumption has been applied in near identical circumstances. In In re
Marriage of Starr (2010) 189 Cal.App.4th 277, 280, the husband bought a home in his
name only and paid the down payment with his separate property funds. Before escrow
closed, the wife quitclaimed her interest in the house. (Id. at p. 280.) At trial, the wife
testified she had agreed to the broker’s suggestion to quitclaim the property because her
credit was poor, and her husband could qualify for a better interest rate. (Ibid.) The
broker told them they could add her back onto the title, and husband said he would.
(Ibid.) The trial court found the home was community property, and the wife did not
freely and voluntarily sign the quitclaim deed. (Id. at p. 281.) Affirming, the court of
appeal concluded the husband’s failure to add the wife to the title was a breach of his
fiduciary duty. (Id. at p. 283.) It explained that the breach of a confidential relationship

                                             12
can constitute undue influence as constructive fraud. (Id. at pp. 284-285.) And in the
instant case, the lender’s suggestion to have the wife quitclaim her interest and be added
to the title later, combined with the husband’s failure to fulfill his promise to do so,
constituted constructive fraud amounting to undue influence. (Id. at p. 289.)
       Just as in Marriage of Starr, here, wife presented evidence that she and decedent
decided to buy the home together. It was only after they were denied a loan that
decedent, at the broker’s suggestion, applied for the loan by himself. Wife later signed
the quitclaim at decedent’s assurance that it meant nothing and that she would be added
to the title later. While the children presented some contrary evidence, the wife’s
evidence constitutes substantial evidence of constructive fraud to support the probate
court’s finding of undue influence under Family Code section 721.

                                        DISPOSITION
       The judgment is affirmed. The parties shall bear their own costs on appeal. (Cal.
Rules of Court, rule 8.278, subd. (a)(5).)

                                                   HULL, Acting P. J.

We concur:

MURRAY, J.

KRAUSE, J.

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