Opinion
JOHNSON,
J.—This is an appeal from a further judgment on bifurcated
issues following entry of an interlocutory judgment of dissolution of marriage. The appellant raises numerous issues in challenging the trial court’s determinations concerning the proper division of property between the parties.
Statement of Facts and Proceedings Below
The appellant, Bishton, and the respondent, Garrity, met in February 1979. Both are lawyers. They had each been previously married. Bishton had three children from his prior marriage while Garrity had four children.
In April or May 1979, Bishton and Garrity decided to get married. Prior to marriage, the parties entered into a premarital agreement. The agreement was initially an oral one. However, as part of this agreement, Bishton
subsequently prepared a written contract.
At the same time the parties signed the premarital agreement, they executed joint mutual wills. Bishton also subsequently placed his house in joint tenancy. Pursuant to the premarital agreement, each party’s separate property was deemed community property and all property acquired after the signing of the agreement was likewise to be deemed community property. Each party was also to assume the role of a parent towards the other party’s children and would continue to perform such role. In the event of the death of either party, it was their desire that the other party be designated the guardian of any minor children of the deceased and custody be awarded to the surviving spouse. If this was not allowed, the surviving spouse would maintain a “parent-like” interest in the children. The agreement further provided the joint wills
were not to be altered or revoked by either party without the consent of the other party as long as the parties were living and married to each other. Moreover, neither party was to make any gifts during his or her lifetime which would tend to defeat the disposition as established in the will.
Bishton and Garrity were married on July 6, 1979.
On August 10, 1982, Garrity filed a petition for dissolution of marriage.
Bishton filed a response on the same day.
On August 20, 1982, Garrity executed a will revoking her prior will executed at the time the premarital agreement was signed. She also executed a deed breaking the joint tenancy of the family residence.
The parties separated on August 21, 1982.
The trial commenced on July 12, 1983. The trial was bifurcated and the issues involving the prenuptial agreement and the instruments executed therewith were tried first. Bishton contended the agreement was breached by Garrity because after the separation she refused to allow him to act as a parent towards her children and she did not act as a parent toward his children
, she revoked her will without his consent, and she revoked the joint tenancy. He contended the agreement should be rescinded as a result and he should have his former property rights restored. The trial court rejected Bishton’s contentions.
After this ruling, the court heard evidence on the valuation and division of the parties’ community property. The court issued its oral decision on the remaining issues on July 26, 1983. The decision provided in relevant part:
“The community property of the parties is found to be valued at and awarded as follows:
“The Hilltree property [the family residence] is awarded to the respondent [Bishton] at the value of $725,000 with the net figure of $533,302 ....
“The Court awards the petitioner’s law practice to her at zero value.
“The Court awards the respondent’s law practice to him at zero value
“The Court finds that the Barnes case [a contingent fee wrongful death action worked on by both parties] is part of the petitioner’s law practice, which assets of that practice are community property.” In addition, the court assigned Garrity liabilities of $1,344.50 and assigned Bishton liabilities of $48,189. To equalize the division of property, the court ordered Bishton to pay Garrity $239,136.
Both Bishton and Garrity requested a statement of decision pursuant to Code of Civil Procedure section 632. On October 14,1983, the court adopted the statement of decision proposed by Garrity with certain modifications.
On the same date, the trial court entered its further judgment on the bifurcated issues, ruling in the manner discussed above.
On November 1, 1983, Bishton filed his notice of appeal from the trial court’s ruling.
On November 23, 1983, Garrity filed a notice of cross-appeal.
Discussion
I. The Trial Court did not Err in Failing to Grant Rescission of the Premarital Contract and Instruments Executed in Connection Therein
On June 7, 1979, Garrity and Bishton signed the written premarital agreement. The purpose of this agreement was to define the respective property rights of the parties. The agreement provided all of the property of the parties was to be deemed community property as was all property acquired after the date of agreement. The agreement also provided the intent of the parties was that each would assume the role of parent to the other’s children and treat the children as if they were his or her own to the greatest extent possible. The parties also desired that in the event of the death of either of the parties, the surviving party be designated the guardian of any minor children of the deceased and be awarded custody. In any event, the surviving spouse would maintain a parent-like interest in the welfare of the deceased party’s children. The parties also executed mutual wills which were not to be revoked or altered without the consent of the other party so long as both parties were living and married to each other.
Bishton testified after the separation, Garrity’s children were in Wisconsin. He asked her if he could call and speak with them. She refused his request. Moreover, in the early part of September, she ordered him not to have any contact at all with her children. He also attempted to give one of Garrity’s children a birthday gift. It was returned however. Bishton subsequently received a letter from her attorney ordering him not to have any contact with her children. In addition, to his knowledge, Garrity has not had any contact with any of Bishton’s children.
Bishton contends Garrity’s conduct after the parties’ separation constituted a repudiation of the premarital agreement and a failure to perform her promises under the agreement. In particular, Bishton argues after the separation, Garrity refused to allow him to continue in a parental role toward her children and she refused to have any contact with his children. Given this conduct, Bishton was entitled to declare a rescission of the agreement and have the property rights of the parties revert to the pre-agreement status. We disagree.
Critical to and implicit in Bishton’s argument is the contention the parties intended the parental role provisions of the agreement to continue to have effect even upon separation or divorce. Bishton acknowledges no explicit provision appears in the agreement to this effect. Thus, in essence, Bishton wants this court to read such a provision into the agreement.
A premarital agreement is a contract subject to the general rules of contract interpretation. (See
Barham
v.
Barham
(1949) 33 Cal.2d 416, 422-423 [202 P.2d 289]; 1 Markey, Cal. Family Law Practice and Procedure § 2.60, p. 2-77.) Pursuant to contract principles, “. . . covenants or terms in an agreement may be implied only if the following conditions are met: (1) the implication must arise from the language used or it must be indispensable to effectuate the intention of the parties; (2) it must appear from the language used that is was so clearly within the contemplation of the parties that they deemed it unnecessary to express it; (3) implied covenants can only be justified on the grounds of legal necessity; (4) a promise can be implied only where it can be rightfully assumed that it would have been made if attention had been called to it; and (5) there can be no implied covenant where the subject is completely covered by the contract.
(Stockton Dry Goods Co.
v.
Girsh
(1951) 36 Cal.2d 677 [227 P.2d 1, 22 A.L.R.2d 1460] [other cites omitted]).”
(Hinckley
v.
Bechtel Corp.
(1974) 41 Cal.App.3d 206, 211-212 [116 Cal.Rptr. 33]; accord
Kessler
v.
General Cable Corp.
(1979) 92 Cal.App.3d 531, 541 [155 Cal.Rptr. 94]; see also
Sayble
v.
Feinman
(1978) 76 Cal.App.3d 509, 515 [142 Cal.Rptr. 895] [“This court has neither the power to make for the parties a contractual arrangement which they themselves did not make nor to insert in the agreement language that appellants now wish were there. (Cites omitted.)”]
Both parties testified there was no discussion concerning this issue. As Bishton testified: “There was never any discussion whatsoever as to what would happen in the event of divorce. The only discussion that we had were along the lines that we were both taking on this responsibility towards the other’s children for the rest of our lives. [11] It was a serious discussion as to what would happen. It was never considered what would happen in the event of a divorce.” Garrity testified to this same effect. As she testified:
“We promised to stay—we were getting married, but beyond that, there were no discussions regarding the agreement being more than a marriage.”
The trial court found Garrity was excused from performance of the agreement after separation because “[t]here was no mutual understanding that the written premarital contract would remain in effect in the event of the parties’ separation and/or dissolution of their marriage.”
As is manifest by the testimony of both parties, the factual basis for the court’s decision is undisputed. Moreover, we believe the court acted properly in not implying a provision for the continuation of the parental obligations upon separation or divorce. The implication certainly does not arise from the language of the agreement.
Moreover, as the parties’ testimony establishes, this provision was not within the contemplation of the parties such that they could be deemed to have found it unnecessary to express it. In addition, it cannot be assumed that the parties would have agreed to such a provision had attention been called to it. It does not follow from the fact each spouse agreed to treat the children of the other spouse as his/her own during marriage that they would also have agreed to this arrangement if separation or divorce occurred. Given the circumstances of this case, we do not believe this is an appropriate one to imply the provision requested.
In arguing Garrity’s actions constituted breaches of the agreement justifying rescission, Bishton relies principally on three
cases—Estate of Warner
(1907) 6 Cal.App. 361 [92 P. 191], sub. opn. (1910) 158 Cal. 441 [111 P. 352], and sub. opn. (1914) 168 Cal. 771 [145 P. 504];
Roy
v.
Roy
(1938) 29 Cal.App.2d 596 [85 P.2d 223]; and
Estate of Barrow
(1938) 27 Cal. App.2d 402 [80 P.2d 1006]. However, in each of these cases, the breach of the agreement which justified rescission was of a material provision clearly expressed in the agreement. (See
Estate of Warner, supra,
6 Cal. App.
at pp. 363, 365-366;
Roy
v.
Roy, supra,
29 Cal.App.2d at pp. 601-602;
Estate of Barrow, supra,
27 Cal.App.2d at pp. 403, 405-406.) As such, these cases are readily distinguishable from the case at bar where the agreement was silent as to the provision which Bishton is seeking to enforce and the circumstances do not justify implying such a provision.
Bishton also argues since the trial court found the agreement terminated at the time of separation, he is entitled to restitution for property rendered under the agreement. As Bishton states, when a court finds a contract has terminated, the parties’ rights are governed by general equitable principles. In the case at bar, these general equitable principles should compel restitution since property of both parties which otherwise would have been separate property was transmuted into community property as a result of the written premarital contract.
Bishton’s argument is focused in its entirety on the parties’ written premarital contract. We find his argument misplaced in this regard since the trial court specifically found the parties’ oral agreement to transmute their property, entered into prior to the written agreement, was fully executed. Thus, the court’s finding of termination relative to the written agreement had no bearing on the already accomplished transmutation of the parties’ property.
Parties prior to marriage may by agreement transmute separate property into community property. Such transmutation is effective even if the agreement is an oral one if subsequent to the marriage it is executed. Execution is disclosed by acts and conduct in confirmation of the agreement.
(Woods
v.
Security-First Nat. Bank
(1956) 46 Cal.2d 697, 701 [299 P.2d 657];
Estate of Dokoozlian
(1963) 219 Cal.App.2d 531, 535-536 [33 Cal.Rptr. 151].) In the case at bar, Garrity testified prior to their marriage the parties orally agreed to transmute all of their separate property to community property. They agreed to pool everything together. The purpose of the written agreement was to put into writing what their oral agreement was—to treat everything as community property. The written agreement did not alter this
basic understanding and the effect of their oral agreement.
Pursuant to their agreement, Garrity listed and sold her house and combined her funds and assets with Bishton’s funds and assets. In addition, title to the Hilltree property was placed in both parties’ names. The parties continued to act pursuant to this arrangement during marriage. Based on these actions, the trial court found the oral premarital agreement was fully executed. As is apparent from the above discussion, substantial evidence supports the court’s determination in this regard.
II. The Trial Court did not Fail to Make an Adequate Statement of Decision
Bishton contends the trial court erred in failing to state reasons for its rulings as is required by Code of Civil Procedure section 632. In particular, Bishton argues the court failed to provide reasons for its rulings regarding termination of the premarital contract, denying restitution, and not compensating him for having to carry almost all of the community obligation. We conclude, however, the court met the requirements of section 632.
Code of Civil Procedure section 632 provides in relevant part: “Upon the request of any party appearing at the trial, ... the court shall issue a statement of decision explaining the factual and legal basis for its decision as to each of the controverted issues at trial.’’
In
People
v.
Casa Blanca Convalescent Homes, Inc.
(1984) 159 Cal.App.3d 509, 524 [206 Cal.Rptr. 164], the court in examining the requirements of section 632 stated: “A trial court in rendering a statement of decision under Code of Civil Procedure section 632 is required only to state ultimate rather than evidentiary facts. [Citations.] . . . [11] . . . Only where a trial court fails to make findings as to a material issue which would
fairly disclose the determination by the trial court would reversible error result. [Citation.] Even though a court fails to make a finding on a particular matter, if the judgment is otherwise supported, the omission to make such finding is harmless error unless the evidence is sufficient to sustain a finding in favor of the complaining party which would have the effect of countervailing or destroying other findings. [Citation.] A failure to find on an immaterial issue is not error. [Citation.]” (Accord
Wolfe
v.
Lipsy
(1985) 163 Cal.App.3d 633, 643-644 [209 Cal.Rptr. 801].)
In the case at bar, the trial court’s statement of decision fairly and completely set forth the factual and legal basis for its decision. It listed all the ultimate facts necessary to decide the issues placed in controversy. Indeed, the court’s statement of decision was extremely detailed and precise.
We are hard pressed to understand the basis for Bishton’s challenge in this regard.
In support of his position, Bishton relies on
In re Marriage of Hargrave
(1985) 163 Cal.App.3d 346 [209 Cal.Rptr. 764];
Miramar Hotel Corp.
v.
Frank B. Hall & Co.
(1985) 163 Cal.App.3d 1126 [210 Cal.Rptr. 114];
and
In re Marriage of S.
(1985) 171 Cal.App.3d 738 [217 Cal.Rptr. 561]. However, these cases are readily distinguishable from the case at bar.
In
Hargrave,
the wife was provided
no explanation
of the factual and legal basis of the referee’s determination of the value of goodwill of the husband’s business despite her objections.
(In re Marriage of Hargrave, supra,
163 Cal.App.3d at pp. 353-354.) In
S.,
the court failed to file a statement of decision when a timely request was made.
(In re Marriage of S., supra,
171 Cal.App.3d at pp. 746-750.) Finally in
Miramar,
the court’s purported statement of decision was largely comprised of legal conclusions and the court deprived the appellants of an opportunity to make proposals and objections concerning the court’s statement of decision.
(Miramar Hotel Corp.
v.
Frank B. Hall & Co., supra,
163 Cal.App.3d at pp. 1127-1129.)
III. The Trial Court Erred in Valuing Garrity’s Law Practice at $o.
Bishton contends the trial court erred in finding Garrity’s law practice had no value. We agree.
In its statement of decision, the trial court stated the most appropriate method for valuing the good will and practice of each party was the excess earnings method.
Utilizing this method in the case at bar, the court found Garrity’s practice had no value. We do not believe this method was the appropriate one for valuing Garrity’s law practice.
In
In re Marriage of Lopez
(1974) 38 Cal.App.3d 93 [113 Cal.Rptr. 58], disapproved on other grounds in
In re Marriage of Morrison
(1978) 20 Cal.3d 437, 453 [143 Cal.Rptr. 139, 573 P.2d 41], the court set forth the assets and liabilities which a trial court should examine in determining the value of a law practice. These included: “(a) fixed assets, which we deem to include cash, furniture, equipment, supplies and law library; (b) other assets, including properly aged accounts receivable, costs advanced with due regard for their collectability; work in progress partially completed but
not billed as a receivable, and work completed but not billed; (c) goodwill of the practitioner in his law business as a going concern; and (d) liabilities of the practitioner related to his business.”
{Id.,
atp. 110; accord 2 Markey Cal. Family Law Practice and Procedure § 24.47 [2], pp. 24-62-24-64.) We believe this method provides a realistic measure of a practice’s actual value.
The method utilized by the trial court fails to take into account a practice’s fixed assets, properly aged accounts receivable, costs advanced, work in progress not billed, etc. We fail to see how a proper determination of the practice’s value can be established without a assessment of these factors.
Bishton also contends the trial court erred in failing to award him any fees and costs recovered in a contingent fee wrongful death case he and Garrity worked on. We disagree.
On August 9, 1982, Bishton and Garrity negotiated a settlement with one of the defendants in the above case. Garrity’s law practice received $52,902.70 in fees and reimbursements for costs as a result of this settlement. Bishton contends he should have received half this amount. However, when all the evidence relative to this issue is examined, this contention must fail. As Garrity testified, this settlement was reached with only one of the defendants. The case still went to trial. The jury returned a verdict for $230,260 but found the plaintiff 45 percent comparatively negligent. The amount of fees Garrity received as a result of the above recoveries was not enough to cover her expenditures on the case. Thus, instead of the windfall alleged by Bishton, Garrity suffered a loss on the case.
Finally, as discussed earlier, the trial court also used the excess earnings method to assess the value of Bishton’s law practice and in utilizing
this method, likewise valued his practice at $0. The trial court erred in this regard and this determination must likewise be reversed.
Bishton contends, however, since the issue of the value of his practice was not before this court on appeal, it is inappropriate for this court to address the propriety of the trial court’s determination. We disagree.
As a general rule, a judgment becomes final against a nonappealing party even though reversed on the appeal of another party. However such a rule does not apply “where portions of the judgment adverse to a nonappealing party are so interwoven with the whole that appeal from a part affects the other parts; in such a situation, the appellate court can reverse the entire judgment if it is necessary to do justice.
(Blache
v.
Blache,
37 Cal.2d 531, 538 [233 P.2d
547]; Estate of McDill,
14 Cal.3d 831, 840-841 [122 Cal.Rptr. 754, 537 P.2d 874].)”
(Patillo
v.
Norris
(1976) 65 Cal.App.3d 209, 219 [135 Cal.Rptr. 210].) “The test of whether a portion of a judgment appealed from is so interwoven with its other provisions as to preclude an independent examination of the part challenged by the appellant is whether the matters or issues embraced therein are the same as, or interdependent upon, the matters or issues which have not been attacked. (Cites omitted.) ‘. . . [T]he judgment is severable when the original determination of those issues by the trial court and reflected in the judgment or any determination which could be made as the result of an appeal cannot affect the determination of the remaining issues of the suit . . . .’ (Cite omitted.)”
(American Enterprise, Inc.
v.
Van Winkle
(1952) 39 Cal.2d 210, 217 [246 P.2d 935]; accord
Estate of McDill, supra; Gonzales
v.
R.J. Novick Constr. Co.
(1978) 20 Cal.3d 798, 805-806 [144 Cal.Rptr. 408, 575 P.2d 1190].)
In the case at bar, the issue raised on appeal by Bishton is whether the formula utilized by the trial court in assessing the value of Garrity’s law practice was the proper one. This is the same issue relative to the court’s valuation of Bishton’s law practice, i.e., did the trial court use the proper formula in valuing his law practice.
The court used the same formula in both instances.
As such, the issues are clearly interwoven. Either the formula utilized by the trial court was proper in both instances or it was improper in both instances. We note this is not a situation in which the court utilized the correct formula but simply miscalculated with respect to one of the law practices. The formula itself was incorrect.
We recognize it can be argued since the valuation of the respective law practices was arrived at through completely distinct calculations, i.e., each practice had completely separate assets, these decisions are not interwoven. However, we do not believe the principle discussed above should be applied in such a limited fashion. To do so would be to allow the very injustice it
was established to prevent. In the case at bar, the trial court utilized the same, exact formula in valuing both practices. This formula was obviously inappropriate as applied to both practices. It is the utilization of this formula which Bishton is challenging, not the valuation of particular assets. Given this, the trial court should reassess the value of both practices utilizing the correct formula.
VI. The Trial Court did not Err in Allocating Most of the Community Obligations to Bishton
The trial court assigned Garrity $1,344.50 in community obligations. It assigned Bishton $49,851.59 in community obligations. Bishton contends this inequality in distribution of the obligations was in error.
Civil Code section 4800 provides in relevant part: “(a) . . . [T]he court shall. . . divide the community property and the quasi-community property of the parties equally . . . (b) Notwithstanding subdivision (a), the court may divide the community property and quasi-community property of the parties as follows: (1) Where economic circumstances warrant, the court may award any asset to one party on such conditions as it deems proper to effect a substantially equal division of the property.” In interpreting this section, the Supreme Court in
In re Marriage of Fonstein
(1976) 17 Cal.3d 738, 748 [131 Cal.Rptr. 873, 552 P.2d 1169], stated: “In dividing the community property equally under the mandate of Civil Code section 4800, subdivision (a), the court must distribute both the assets and the obligations of the community
so that the residual assets awarded to each party after the deduction of the obligations are equal.”
(Italics added.) (Accord
In re Marriage of Barnert, supra,
85 Cal.App.3d atpp. 420-421.) Moreover, as stated in subdivision (b), a trial court may award a single asset entirely to one of the spouses provided it awards that asset on such conditions necessary to effect an equal division of the property. (See
In re Marriage of Bridgen
(1978) 80 Cal.App.3d 380, 390 [145 Cal.Rptr. 716].) For instance, when a court awards one of spouses the family residence and the residence is the only substantial asset, such an award would generally be conditioned upon the spouse paying the other party money equivalent to that party’s one-half interest in the house.
(Badillo
v.
Badillo
(1981) 123 Cal.App.3d 1009,1011-1012 [177 Cal.Rptr. 56];
In re Marriage of Eastis
(1975) 47 Cal.App.3d 459, 462, fn. 1 [120 Cal.Rptr. 861].)
In the case at bar, the court awarded Garrity obligations in the amount of $1,344.50 while awarding Bishton obligations in the amount of $49,851.59. However, the court awarded Bishton the family residence which had a present equity of $533,302. Given its community property status, Garrity would have been entitled to one-half of the house’s equity or $266,651. Yet, the court recognized the disparity in the party’s assumed obligations and thus only ordered Bishton to pay Garrity $241,296.74. Had the court imposed equal debt obligations, Bishton would have owed Garrity her full one-half interest. Thus, what Bishton would have gained in terms of a lesser amount of debt to third parties would have been offset by the increase in the cash-to-equalize payment to Garrity. Given that the net effect would be the same, the court did not err in this regard.
Disposition
The matter is remanded to the trial court to determine the value of the parties’ respective law practices in accordance with the principles discussed in this case and to reapportion the parties’ respective community property shares accordingly. Both parties to bear their own costs on appeal. In all other respects, the decision is affirmed.
Lillie, P. J., and Thompson, J., concurred.
A petition for a rehearing was denied June 18, 1986.