Coats v. Callaway CA4/1

• Court: California Court of Appeal
• Decided: September 25, 2015
• Docket: D068064
• Status: Unpublished

Opinion

Filed 9/25/15 Coats v. Callaway CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

SUSAN K. COATS, D068064

Plaintiff and Respondent,

v. (Super. Ct. No. PRODS1000867)

HELEN CALLAWAY, Individually and as Trustee, etc.,

Defendant and Appellant.

APPEAL from a judgment of the Superior Court of San Bernardino County,

Raymond L. Haight III, Judge. Affirmed.

Martin & McCormick, John D. Martin and Kathy J. McCormick for Defendant

and Appellant.

Alexandra S. Ward and Damian G. Garcia for Plaintiff and Respondent. Helen Callaway1 appeals a judgment ordering the return of properties to the

Callaway Family Trust. She contends the court's statement of decision is inadequate and

its judgment unsupported by substantial evidence, therefore requiring reversal. We

disagree.

FACTUAL AND PROCEDURAL BACKGROUND

Edna Callaway married Robert Blakey, Sr., in or around 1948. They had two

sons, Robert and William. When Blakey was killed in the Korean conflict in 1951, Edna

received veteran and insurance benefits from his death. In 1953, she used a portion of

those benefits to purchase real property at 383 Badillo Street. Edna and her sons lived in

the house on the front portion of the property and she rented out two bedrooms in the

house on the back of the property. Edna met Donald Callaway after he started renting

one of the back rooms. Shortly thereafter, Edna and Donald married and had one child,

Susan K. Coats.

In 1959, Edna and Donald purchased real property at 416 Badillo Street using the

remaining portion of the benefit money Edna received from Blakey, Sr.'s, death, as well

as money from her savings, and from the equity in the 383 Badillo Street property.

Donald joined in executing the grant deed to Edna "for the sole purpose of vesting title in

his wife as her sole and separate property." His counsel now alleges he did this so the

property would be safe from any lawsuits that might come against him through his

business.

1 To avoid confusion, we will use first names for individuals who share the same last name. 2 Edna, Donald, and their three children moved into 416 Badillo Street, but

continued to rent out the houses at 383 Badillo Street. In 1962, Edna's father died,

leaving her a one-third interest in his real property at 624 Badillo Street with the

remaining two-thirds interest divided among her siblings. Edna subsequently purchased

the remaining interest from her siblings and took title to 624 Badillo Street, again with

Donald joining in the execution of the deed simply "for the sole purpose of vesting title in

his wife as her sole and separate property." Edna then began using 624 Badillo Street as

another rental property.

During their marriage, Donald worked as an interstate truck driver, often

remaining away from home for days at a time. Eventually, Donald became an intrastate

truck driver. He bought a mobile home in Barstow, California, where he stayed during

the week while completing his truck routes. He drove from approximately 1967 until his

retirement in the late 1980's. Edna stayed home with the children and maintained and

managed the rental properties at 383 and 624 Badillo Street. She later worked as a

secretary for a local school district; however, she continued to manage the rental

properties.

Edna and Donald kept separate bank accounts throughout their marriage. Edna

had separate accounts for income generated from each of the rental properties and she

deposited her wages and earnings into her own savings account. Donald similarly

deposited his wages in his own account and used his separate account to pay for certain

expenditures related to maintenance of the rental properties.

3 By 1984, Edna had completely paid off all loans on the three Badillo Street

properties and obtained a full reconveyance of each. She intended for each of her

children to inherit one of the three properties after she and Donald died. In order to

memorialize this desire, Edna and Donald met with attorney Michael Newman in 1990 to

establish the "Callaway Family Trust" (1990 Trust). Newman drafted the 1990 Trust so

that its assets would be divided into three new trusts upon the death of the first spouse:

the Survivor's Trust, the Family Trust, and the Marital Trust.

Pursuant to the terms of the 1990 Trust, the Family Trust and the Marital Trust

were irrevocable and notably could not be dissolved or amended once the first spouse

died. It also stipulated that upon the death of the surviving spouse, all remaining assets

were to be divided equally among their three children. Newman inserted a clause that

stated all property transferred into the trust was to keep its separate or community status

upon transfer. Edna and Donald conveyed the three Badillo Street properties into the

1990 Trust as Edna's sole and separate property. Donald was made trustee.

Edna died in 1993. Donald alerted Newman of her death and met with him to

discuss the 1990 Trust. Newman informed Donald that Edna's death triggered the

division of the trust and that Donald was now required to convey the three Badillo Street

properties into the Family Trust. Donald did not make the transfer, although he did

appoint his daughter as the successor trustee. He continued to reside at 416 Badillo Street

and managed the other Badillo Street rental properties.

In the late 1990's, Donald began dating Helen. Donald and Helen married in 2006.

Shortly thereafter, Donald decided to amend the 1990 Trust so that he could provide for

4 Helen after his death. He met with attorney Keith Walker to request this amendment.

Donald explained the creation of the 1990 Trust, gave Walker information about the

Badillo Street property deeds, and told him the changes he wished to make. Walker

informed Donald that Donald lacked authority to amend the trust because the properties

seemed to be Edna's separate property. This information upset Donald, who believed the

Badillo Street properties were community property. Walker prepared a petition in order

to determine if any community property interest existed in the Badillo Street properties,

giving Donald the ability to amend the trust. Donald never returned to sign and file the

finalized petition.

Donald and Helen then set up a meeting with George Hoffman, hoping he could

fulfill their desire to amend the 1990 Trust. Hoffman was not licensed to practice law in

California. However, Hoffman often met and advised clients interested in estate

planning. After hearing Donald's explanation of how the Badillo Street properties were

acquired and reviewing the deeds to the properties, Hoffman concluded the properties

had been transmuted to community property over the course of Donald and Edna's

marriage and therefore Donald had the authority to amend the trust. Hoffman revoked

the 1990 Trust in its entirety and created two new trusts: "The Edna F. Callaway

Decedent Trust" (Edna Trust) and "The Donald L. Callaway Living Trust" (Donald

Trust). The Badillo Street properties were divided equally among the two trusts. Donald

made his three children the beneficiaries of the Edna Trust and Helen the beneficiary of

the Donald Trust.

5 Donald passed away in 2009. As trustee of Donald's estate, Helen transferred the

assets from the Donald Trust to herself. When Coats and her brothers inquired about the

1990 Trust and its assets, they learned of Donald's revocation of the 1990 Trust and

Helen's acquisition of half of the Badillo Street properties through the Donald Trust. This

information upset the children because the Badillo Street properties had been promised to

them many times throughout their lives. Coats subsequently filed suit against Helen—

individually and as trustee of Donald's estate—asserting numerous claims, including

breach of trust and undue influence.

A 10-day bench trial took place in July 2012. After hearing the evidence and

arguments by counsel, the court issued its findings in a written document titled,

"Statement of Decision."2 The court found the Badillo Street properties to be Edna's

separate property and ordered Helen to return to the 1990 Trust the property interest she

received through the Donald Trust. Helen submitted objections to the written findings,

which were subsequently heard and denied. Judgment was entered in October 2013.

Helen filed a timely notice of appeal.

DISCUSSION

I

Statement of Decision

After a bench trial, the court must provide its tentative decision to the parties.

(Cal. Rules of Court, rule 3.1590(a).) Within 10 days of this decision, "any party that

2 The Honorable J. Michael Welch heard the evidence and authored the statement of decision.

6 appeared at trial may request a statement of decision to address the principal controverted

issues." (Id., rule 3.1590(d).) The court is only required to issue a statement of decision

if a party requests it do so. (Code Civ. Proc., § 632.)3 A party has 15 days after a

statement of decision has been issued to file any objections. (Cal. Rules of Court, rule

3.1590(g).)

The statement of decision is the "touchstone to determin[ing] whether or not the

trial court's decision is supported by the facts and the law." (Slavin v. Borinstein (1994)

25 Cal.App.4th 713, 718 (Slavin).) It also allows an appellant to avoid the doctrine of

implied findings, which presumes a reviewing court will infer that a trial court made all

factual findings necessary to support its decision. (Fladeboe v. American Isuzu Motors,

Inc. (2007) 150 Cal.App.4th 42, 48 (Fladeboe).) However, this presumption is only

rebutted if a statement of decision is requested and objections as to any ambiguities or

omissions in the decision are timely filed. (Ibid.)

A. Waiver

Neither party in this case requested a statement of decision nor did they direct the

court on which issues to address in its written decision. Coats contends that for this

reason, Helen waived any objections to deficiencies in the court's findings. In order for

Coat's contention to be correct, we would need to treat the trial court's written findings as

merely a tentative decision—one that required a formal request by the parties to become a

statement of decision pursuant to section 632. However, where a trial court issues a

3 All further statutory references are to the Code of Civil Procedure unless otherwise indicated. 7 "lengthy and detailed statement which it specifically entitle[s] 'Statement of

Decision,' . . . the court . . . clearly intend[s] that written decision be a statement of

decision under . . . section 662." (In re Marriage of Rising (1999) 76 Cal.App.4th 472,

476, fn. 7 (Rising); see Slavin, supra, 25 Cal.App.4th at pp. 718-719.) We agree with this

reasoning and, therefore, will treat the court's written findings in this case as a formal

statement of decision.

While treating the court's written findings as a formal statement of decision fulfills

Helen's requirement under section 632, she was still required to file timely objections to

the statement of decision in order to preserve any issues with the decision on appeal.

(See § 634.) Helen's objections were untimely.4 Therefore, she has waived on appeal

any objections regarding ambiguities or omissions in the statement of decision. The

doctrine of implied findings stands: this court will presume the trial court made all

necessary factual findings to support the judgment, so long as substantial evidence

supports those findings. (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121

Cal.App.4th 452, 462.)

B. Adequacy

Even if Helen had timely objected to the statement of decision, we find her

objections lack merit. Helen contends the statement of decision is inadequate for three

reasons: the findings were contrary to the record; the findings were based on matters

4 Helen filed a stipulation allowing her until November 26, 2012, to file any objections to the statement of decision. She did not file her objections until December 10, 2012—36 days after the court issued its statement of decision. 8 outside the record; and the findings failed to set forth a factual and legal basis for refusing

to apply the Moore/Marsden rule (Rule).

A statement of decision is adequate if it provides a factual and legal basis for the

decision in regard to the material issues in the case. (Altavion, Inc. v. Konica Minolta

Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 45-46.) Any conflict in the

evidence or "reasonable inferences to be drawn from the facts" will be resolved in

support of the court's decision. (Id. at p. 46.) A statement of decision only needs to

include ultimate findings, not evidentiary facts. (In re Marriage of Balcof (2006) 141

Cal.App.4th 1509, 1531 (Balcof).)

Here, most of Helen's objections to the statement of decision are based on her

contention that the court's findings were contrary to the record. However, all of the

evidence she provides to support this contention is contrary to the evidence the court used

to support its decision. She does not refute the evidence the court relied on, but instead

merely provides alternative evidence she believes the court should have relied on in

making its findings.

Appellate courts do not " 'reweigh evidence or reassess the credibility of

witnesses.' " (Balcof, supra, 141 Cal.App.4th at p. 1531.) It is not the job of this court to

decide if the trial court based its findings on the best evidence. We only determine if the

decision was based on substantial evidence. (See ibid.) In this case, the statement of

decision gave lengthy and detailed evidentiary support for the court's findings. It is clear

the language and scheme of the 1990 Trust was very important to the decision. The court

determined from this, as well as the testimony of Coats and her brother William, that the

9 "clear intent of Edna and Donald was to pass the properties . . . to the three children."

This intent was established many years prior to Helen entering Donald's life and the trust

was set up so that the surviving spouse could not erase this long-standing intent years

after the first spouse's death. The court also explained that its decision relied heavily on

the testimony and actions of attorneys Newman and Walker, who both told Donald he did

not have the authority to change the trust.

In addition, the statement of decision specifically discussed the evidence Helen

contends should have been used to support the findings, namely, Edna and Donald's tax

returns. The court spent over a page of its decision discussing the tax returns and came to

the conclusion that this evidence was "really not that convincing." The court articulated

that while it agreed with Helen that the tax returns show several years of net losses on the

rental properties, the court found the returns did not, by themselves, support the

presumption that the properties therefore could not pay for themselves and required

supplemental income from Donald. The court explained this was simply too big of a leap

to make, since many other inferences could be drawn from the same evidence. The court

also stated it was "noteworthy that there was no real evidence to overcome the

presumption of title."

Based on the statement of decision and the record in this case, we conclude there

is substantial evidence in the record to support the court's findings. The statement of

decision is adequate in that it addresses all material issues and gives a sound legal and

factual basis for all its conclusions. Helen's contentions that the findings are contrary to

the record amount to nothing more than a second "bite" at the proverbial "apple"—an

10 attempt to get this court to reconsider her evidence as opposed to that which supports the

judgment. (Fladeboe, supra, 150 Cal.App.4th at p. 48; see Balcof, supra, 141

Cal.App.4th at p. 1531.) This we cannot and will not do, as it would defeat the purpose

of requiring a party to object timely to omissions or ambiguities in the statement of

decision. (See In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.)

II

Community Property

Real property is subject to the form of title presumption, which provides "the

owner of the legal title . . . is presumed to be the owner of the full beneficial title." (Evid.

Code, § 662.) While property acquired during marriage is usually presumed to be

community property, this presumption " 'has no application . . . where "a different

intention is expressed in the written instrument." ' " (In re Marriage of Brooks &

Robinson (2008) 169 Cal.App.4th 176, 186.) " 'Where one spouse takes title to property

in his or her name, without reference to the marital relationship or the other spouse, it is

presumed that the property is the separate property of the spouse who holds title.' " (Id. at

p. 185.) The form of title presumption can only be rebutted by clear and convincing

proof that the title is other than as stated in the deed. (Evid. Code, § 662.) The mere fact

that property is acquired during marriage does not rebut this presumption. (In re

Marriage of Brooks & Robinson, at p. 186.)

Based on the record and the trial court's findings, we conclude Helen provided

insufficient evidence to rebut the form of title presumption. The only evidence Helen

proffered to rebut this presumption was that Donald told Hoffman that he and Edna

11 "agreed verbally to continue the community property aspects of their ownership interest"

despite transferring the legal title to Edna as her sole and separate property. However,

the court specifically stated in its statement of decision that it did not believe Hoffman's

testimony because he had "no understanding of the law and facts of this matter." Because

Helen failed to produce any further evidence to overcome the form of title presumption

and because as a court of review we do not determine credibility (see Niko v. Foreman

(2006) 144 Cal.App.4th 344, 364-365), we conclude the court properly found the

presumption applied to this case and that Helen did not meet her burden in rebutting it.

A. Moore/Marsden Rule

Helen next contends the trial court should have concluded that Donald obtained a

community property interest in the Badillo Street properties—regardless of the form of

title presumption—under the Rule, which states " '[w]here community funds are used to

make [loan] payments on property purchased by one of the spouses before

marriage . . . "the community [obtains] a pro tanto community property interest in such

property . . . ." ' " (In re Marriage of Sherman (2005) 133 Cal.App.4th 795, 799-800.)

The Rule also applies when community funds are used to make improvements to property

purchased before marriage, if such improvements increase the property's value. (Id. at

p. 800.) However, the Rule does not apply to payments from community funds for tax or

interest on such property, since these expenditures do not increase the property's equity

value. (In re Marriage of Moore (1980) 28 Cal.3d 366, 372 (Moore).)

While Helen correctly states the Rule in her brief, the evidence she provides is not

applicable under the Rule. Helen relies heavily on the fact she produced evidence "that

12 established the Badillo Street properties were treated by Edna and Donald as community

property assets." However, the intentions of the parties and their manner of treatment of

the property are not relevant to the Rule's calculation of pro tanto community interest.

(See Moore, supra, 28 Cal.3d at pp. 371-372.)

In addition, Helen cites to numerous service contracts and bills paid by Donald for

maintenance of the Badillo Street properties. These payments are also inconsistent with

the Rule because they do not provide evidence of loan payments or improvements made

to the property; rather, they simply provide evidence that Donald helped with routine

maintenance of the properties.5 Helen also proffered evidence that Donald paid the taxes

for the Badillo Street properties. As noted, the Rule does not apply to property tax

payments. As such, we conclude that as a matter of law the Rule does not apply here and

that Donald did not acquire a pro tanto community property interest in the Badillo Street

B. Substantial Evidence

Helen also contends that there is insufficient evidence in the record to support the

court's finding that the Badillo Street properties are Edna's separate property and that the

evidence she provided was sufficient to overcome the presumption of title relied on by

the Trial Court. Helen's contention ignores our role as a reviewing court under the

substantial evidence standard. " 'Where findings of fact are challenged on a civil appeal,

we are bound by the "elementary, but often overlooked principle of law, that . . . the

5 Even if these payments were considered to be improvements to the properties, Helen provided evidence that Donald paid for these services from his separate checking account, not community funds, as required under the Rule. 13 power of an appellate court begins and ends with a determination as to whether there is

any substantial evidence, contradicted or uncontradicted," to support the findings

below.' " (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 957,

958.) We must 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

in accordance with the standard of review so long adhered to by this court.' " (Id. at

pp. 957-958.) Under this standard, the testimony of even one witness may be sufficient

to sustain a finding. (Electronic Equipment Express, Inc. v. Donald H. Seiler & Co.

(1981) 122 Cal.App.3d 834, 849.)

Here, the court's statement of decision and the findings therein provide sufficient

evidentiary support that the Badillo Street properties were the sole and separate property

of Edna.

DISPOSITION

The judgment is affirmed. Coats is awarded her costs on appeal.

14 PRAGER, J.* WE CONCUR:

NARES, Acting P. J.

IRION, J.

* Judge of the San Diego Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. 15