Osinoff v. Huter
Filed 1/10/13 Osinoff v.
Huter 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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
LESLIE OSINOFF,
Plaintiff and Appellant,
v.
KAREN HUTER,
Defendant and Appellant.
2d
Civil No. B233539
(Super.
Ct. No. SD039348)
(Ventura County)
Former
spouses Leslie Osinoff (Husband) and Karen Huter (Wife) appeal the
characterization and value of three marital assets. Husband argues that the couple's Thousand Oaks
residence and a $100,000 loan to finance its renovation are assets and
liabilities of the community. Wife
contends that Husband's general contractor business should be valued as of the
date of their separation (rather than the date of trial). We agree with each. We modify the judgment accordingly, reverse
and remand for further proceedings to value the business, and affirm the
judgment in all other respects.
HISTORY
A. Facts
Husband
and Wife married on May 27, 2006. Early
the next year, Wife contributed at least $77,000 of her own money toward
purchasing a single-family home on Stuart Circle in Thousand Oaks (the
residence). Both Husband and Wife
intended that the residence would be the marital home. They nevertheless decided to purchase and
finance the residence in Husband's name alone and subsequently to transfer the
title back to both spouses. The grand
deed and deed of trust accordingly vested title in Husband as "a married
man as his sole and separate property."
Wife also executed an interspousal transfer deed ceding any interest in
the residence to Husband.
Three
months later, Husband and Wife executed an interspousal
transfer deed. This second deed
transferred the residence from Husband to "[Husband] and [Wife], Wife of
Grantor." At the same time, Husband
and Wife also executed a Declaration of Homestead exemption. The exemption referred to Husband and Wife as
"joint owners." The spouses
attempted to record both documents, but the Recorder's Office rejected them
because the documents did not list the parties' middle names. Neither spouse recorded corrected documents.
Husband
and Wife thereafter renovated the residence.
They financed the renovation with $100,000 of Wife's separate property
and with a $100,000 loan from Husband's mother, who was at that time legally
incompetent. Both spouses participated
in planning the renovation, and Husband's general contracting business did the
work.
The
parties separated on August 18, 2009. A
few days earlier, on August 10, 2009, Husband filed a Cessation of Notice to
shorten the time subcontractors could file liens; in that notice, Husband
listed himself as the residence's "Owner." Husband also applied for a restraining order
against Wife on August 18, 2009, and referred to the residence as "my
home." A few months later, on
November 16, 2009, husband recorded a deed purporting to transfer the residence
from himself to the Leslie Osinoff Trust.
B. Procedural
History
Divorce
and dissolution proceedings commenced.
The parties resolved the disposition of most of their assets and
liabilities. Three issues remained: (1) the characterization of the residence;
(2) the characterization of the $100,000 loan from Husband's mother; and (3)
the value of Husband's business.
Prior
to trial, Wife moved to value Husband's business as of the date
of separation (August 18, 2009) rather than the date of trial (March 4,
2011). The trial court denied the
motion. The court found that Wife
"had not met the burden of proof to use an alternate valuation date." The court accordingly used the default
valuation date—that is, the date of trial—"pursuant to Family Code section
2552 [, subdivision] (a) and the case law supporting that."
The
parties' positions regarding the characterization of residence evolved over the
course of litigation. In their initial
court filings, Husband listed the residence as his separate property, and Wife
listed it as her community property. By
the time of trial, however, the parties had swapped positions. This was likely prompted by the parties'
stipulation tying the valuation of Husband's business to the characterization
of the residence. If the residence were
determined to be Husband's separate property, the business would be valued at
$320,500; if community property, the business would be valued at $104,500. This meant that Husband owed Wife more if the
residence were declared his separate property.
The
case proceeded to bench trial in
stages on March 4, 2011. At the end of
the first stage, the court ruled the residence was Husband's separate
property. The court was "not
impressed by the fast and loose nature of lenders that advise people to get
loans . . . not taking into account the community property . . . consequences
of such choices." The court
reasoned that "the deeds, the loans, Declarations of Disclosure of each
party to a lesser extent, the statements by the parties in their restraining
order actions, and the post-separation conduct of [Husband] in transferring the
property to his own separate trust" meant the property was Husband's
separate property. The court placed no
weight on Wife's involvement with the renovation. But the court noted that "[i]f this case
had involved a long term marriage under a few different facts, from an equity
standpoint alone, there would be a need for the property to be a community
property type of asset."
Based
on that finding, the court ordered Husband to pay Wife $236,250. The court calculated that amount by awarding
wife: (1) one-half of the stipulated
value of the business ($320,500), which came to $160,250; and (2) the full
value of the equity in the residence, which the parties stipulated was $76,000.
property, the court ruled in the second phase that the debt to Husband's mother
for improvements to that property was his separate debt as well.
DISCUSSION
We
review the factual findings underpinning the trial court's characterization for
substantial evidence, but engage in de novo review where "'the issue of
characterization to be given (as separate or community property) . . . requires
a critical consideration, in a factual context, of legal principles and their
underlying values . . . .'" (
Cal.App.4th 725, 734.) We review a trial
court's selection of a valuation date for an abuse of discretion. (In re
Marriage of Duncan (2001) 90 Cal.App.4th 617, 624 (Duncan).)
A. Characterization
of the Residence
The
characterization of marital property often turns on how we apply and resolve
conflicts among a hierarchy of legal presumptions. This case is no different.
The baseline
presumption directs us to presume that property acquired during the marriage is
community property. (§ 760.) This presumption yields to a second
presumption that requires us to give presumptively controlling weight to the
form of title in which property is held.
(Evid. Code, § 662; In re
Marriage of Brooks & Robinson (2008) 169 Cal.App.4th 176, 186, 189 (
the conclusion that the residence is community property. The baseline presumption points us to
characterizing the residence as community property because Husband and Wife
acquired it while married. But the
parties vested title to the residence in Husband "as his sole and separate
property." This presumptively
renders the residence Husband's separate property, except that the parties
subsequently vested title in themselves as "Husband and Wife." This second transfer presumptively takes us
back to the conclusion that the residence is community property.
Wife
offers three overarching reasons why, in her view, the last portion of our
analysis is flawed. First, she contends
that the form-of-title presumption cannot
be invoked a second time. Relying on
Brooks, supra, 169 Cal.App.4th 176, Wife argues that the title presumption
may only be used once per marriage for any item of property. Brooks does
not so hold. Brooks addressed the validity of a transfer of property held as a
separate property of one spouse to a third party; it did not involve successive
changes in title between spouses.
Second,
Wife argues that the title presumption should
not be invoked a second time because the transfer did not lawfully
transmute the property back into community property. Wife begins with the contention that the
parties' inability to record the second grand deed renders it void. However, recording is not necessary to make a
transfer effective between the
signatories to the transfer—in this case, Husband and Wife. (Civ. Code, § 1217; Evid. Code,
§ 622.) Wife next argues that the
second deed did not comply with the procedural requirements for interspousal
transfers, which are called "transmutation[s]." (§ 852.)
We are not persuaded because a duly executed grant deed has long been
sufficient to meet the statutory requirement that an interspousal transfer expressly
state that the characterization or ownership of the property is being
changed. (Estate of Bibb (2001) 87 Cal.App.4th 461, 463, 468-469 [so
holding]; In re Marriage of Lund
(2009) 174 Cal.App.4th 40, 50 [explaining transmutation standard].) Wife lastly asserts that the transfer did not
convert the residence to community property because it vested title in
"Husband and Wife"—not "Husband and Wife as community property."
We conclude that the language "Husband and Wife" sufficiently
conveys the spouses' intention to convert the residence into community
property, at least in the absence of any further specification of the form of
title (such as a joint tenancy or tenancy in common). We accordingly need not decide whether the
statutory presumption that jointly acquired property constitutes community
property (§ 2581) also compels this result.
(Compare In re Delaney (2003)
111 Cal.App.4th 991, 997 [limiting § 2581 to newly acquired property] with
Cal.App.4th 864-865 [applying § 2581 to already acquired property].)
Even if
we were to accept Wife's arguments and decline to treat the second,
interspousal deed as an independently valid transfer invoking the form-of-title
presumption a second time, that second deed is still significant. That is because the second transfer, as a
minimum, rebuts the presumption arising from the initial acquisition of the
residence in Husband's name alone. The
presumption arising from the form of title may be rebutted by clear and
convincing evidence of an agreement of the parties that "the title
reflected in the [initial] deed is not what the parties intended." (Brooks,
The second deed constitutes such evidence because it indicates a mutual
intention to convert the residence back to joint ownership.
Wife's
final set of arguments urges that we place no weight on the second transfer
because that transfer is either (1) trumped by the further presumption of undue
influence or (2) eclipsed by clear and convincing evidence that the spouses
intended the property to be Husband's separate property. We disagree.
Interspousal transfers are presumed to be the product of undue influence
(and hence invalid) notwithstanding the title presumption. (§ 721; In re Marriage of Haines (1995) 33 Cal.App.4th 277, 293, 301.) However, this presumption is only triggered
by transfers advantaging one spouse over another. (In re
Marriage of Matthews (2005) 133 Cal.App.4th 624, 629.) In this case, Wife is not in a position to complain
about undue influence because, at the time the second grand deed was executed,
ceding his separate property interest in the residence to the community. We also do not find clear and convincing
evidence in the record indicating any mutual intent by the parties to treat the
property as separate property because the spouses' conduct after the second
deed points in different directions.
B. Debt to
Husband's Mother
A debt
incurred for the benefit of the community is community debt. (Cf. § 2625.) Because the loan from Husband's mother was
"most[ly]" used to renovate the residence and that asset is community
property, the debt is a community debt.
Wife argues that the loan is unenforceable, but she forfeited this
argument by not raising it until now.
C. Valuation
Date for Husband's Business
In her
appeal, Wife argues that the trial court erred in refusing to grant her request
to value Husband's general contracting business as of the date of separation.
Husband argues that we
may not consider Wife's appeal. Husband
first asserts that we lack jurisdiction.
However, we may entertain any issues raised on appeal from a final
judgment unless the issue is immediately appealable. (Comerica
Bank v. Howsam (2012) 208 Cal.App.4th 790, 822.) Because orders fixing the valuation date are
not immediately appealable (Code Civ. Proc., § 904.1), we have
jurisdiction over this issue. Husband also
contends that Wife's stipulation to the business's value estops her from assailing
the date of valuation. Because the
court's ruling on the date of valuation preceded and precipitated the parties'
stipulation on the same issue, Wife may challenge the earlier ruling. (Burrow
v. Pike (1988) 190 Cal.App.3d 384, 393.)
On the merits, the default rule is to use the date of trial. (§ 2552, subd. (a).) Of course, a court may, "for good cause
shown" and "to accomplish an equal division of the community estate
of the parties in an equitable manner," select any other date after the
spouses' separation. (
cause" to use the date of separation itself when the asset to be valued is
a "professional practice" or "small personal service business[]
which rel[ies] on the skill and reputation of the spouse who operates"
it. (E.g., In re Marriage of Geraci (2006) 144 Cal.App.4th 1278, 1291;
pp. 625-626.) We have adopted this rule
because the date of separation is "the cutoff date for the acquisition of
community assets." (
Cal.App.4th 250, 253-254 (Stevenson).) Because the value of a small personal service
business is largely the product of the owning spouse's personal efforts,
changes in the value of such business should accrue to the benefit (or
detriment) of the owning spouse.
Husband
argues that his general contracting business falls outside this rule. However, general contractors operate personal
service businesses. (
pp. 254-255; see also Bing v. Bing
(1959) 168 Cal.App.2d 348, 350.) Husband
further contends that his business has suffered losses due to the downturn in
the economy rather than any intentional conduct by him to devalue the business. But this rule applies even when the
business's value is not tied "exclusively" to the owner's personal
efforts (Duncan, supra, 90 Cal.App.4th at
p. 627), and even when there is no evidence of intentional efforts to devalue
the business (Stevenson,
We reverse
the trial court's judgment, and remand the cause to the trial court for a
hearing on valuation of the business and, thereafter, for entry of judgment
otherwise consistent with our ruling. We
affirm the judgment in all other respects.
Each
party to bear its own costs on appeal.
NOT
TO BE PUBLISHED.
HOFFSTADT,
J.
We concur:
GILBERT,
P. J.
PERREN,
J.
>
Roger L. Lund, Judge
Superior Court County of Ventura
______________________________
Brian
M. Moore for Plaintiff and Appellant Leslie Osinoff.
Meghan
B. Clark and Bobette Fleishman for Defendant and Appellant Karen Huter.
name="_ftn1" title=""> [1] All statutory references are to the Family Code unless otherwise stated.
name="_ftn2" title=""> [2] The court awarded the full
value of the equity, rather than half its value, to offset Wife's contribution
of $77,000 of her separate property in purchasing the residence.
