Farfan v. Medrano (In re Farfan)

• Decision Date: 11 July 2022
• Docket Number: H047972
• Parties: In re the Marriage of CECILIA ZAVALA FARFAN and MIGUEL MEDRANO v. MIGUEL MEDRANO, Respondent. CECILIA ZAVALA FARFAN, Appellant,
• Court: California Court of Appeals Court of Appeals

In re the Marriage of CECILIA ZAVALA FARFAN and MIGUEL MEDRANO

CECILIA ZAVALA FARFAN, Appellant,
v.
MIGUEL MEDRANO, Respondent.

H047972

California Court of Appeals, Sixth District

July 11, 2022

NOT TO BE PUBLISHED

(Monterey County Super. Ct. No. 17FL001024)

Danner, J.

Appellant Cecilia Zavala Farfan (Cecilia) challenges a postjudgment order characterizing the family home, which she shared with her ex-husband, respondent Miguel Medrano (Miguel),^[1] as community property. Cecilia raises a number of claims, including that the presiding judicial officer improperly reconsidered findings made by a different judicial officer and that the order violates California's transmutation statutes by failing to give effect to a valid quitclaim deed. For the reasons explained below, we affirm the order.

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I. FACTS AND PROCEDURAL BACKGROUND

A. Marriage and Purchase of Home^[2]

Cecilia and Miguel married in 2007 and separated in 2016. In 2011, they obtained a family home, located at 19020 Souza Way in Salinas (home). The home is the sole asset at issue in this appeal.

Due to his credit history, Miguel did not qualify for a home purchase loan. Therefore, Miguel arranged for his brother Alfredo^[3] to participate in its purchase. Alfredo and Cecilia appeared on the home's title as joint tenants and were the named borrowers of the bank loan.

In connection with the purchase of the home, Miguel signed a quitclaim deed at the request of either the lender or the title company. The quitclaim deed stated that Miguel waived any future interest in the home and deemed the home to be Cecilia's separate property.

For a number of years, Cecilia and Miguel lived together in the home. Miguel contributed to the monthly mortgage payments, although the parties dispute the amount of his contribution. In 2015, Miguel moved out of the home.

B. Procedural History

1. Initiation of Proceedings

In 2017, Cecilia filed a petition for dissolution of the marriage (petition). In the petition, Cecilia requested that the trial court confirm the home as her separate property. The dissolution case was assigned to Judge Larry E. Hayes of the Monterey County Superior Court. (The identities of the bench officers who presided over the hearings on the petition are germane to Cecilia's claims on appeal.)

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Miguel contested Cecilia's characterization of the home. In May 2018, Miguel filed papers in the trial court contending that the home was a community asset that should be divided equally. Miguel raised various arguments, including that he and Cecilia had previously agreed the home would be his and Cecilia's and that Alfredo was just "standing in for [Miguel] so the purchase could occur." Miguel contended Cecilia breached her fiduciary duty and committed constructive fraud by not placing Miguel on the title to the home. Alternatively, assuming there was no fraud or wrongdoing, Miguel argued the court could impose a resulting trust based on their oral or implied agreement that Cecilia and Miguel would own the home together.

2. 2018 Court Trial and Statement of Decision by Judge Johnson

A court trial occurred on June 4, 2018, that addressed the ownership of the home, among other issues. Judge Margaret S. Johnson presided over the trial due to Judge Hayes's temporary unavailability. Judge Johnson heard testimony from Cecilia and Miguel but not from Alfredo, who was not then a party to the litigation.

Cecilia testified that she owned the home with Alfredo, Miguel's brother, and separately from Miguel. Miguel had handled the purchase arrangements for the home with respect to the mortgage and his brother's involvement. Cecilia did not know much about the purchase of the home until she signed the purchase documents.

Miguel told Cecilia that he could not be on the loan for the home because of his poor credit, but his brother would cosign with her. Based on her credit, Cecilia could not have qualified for a loan by herself. She estimated the down payment on the house was $14,000.

Cecilia never promised to add Miguel to the title of the home, and she never had a conversation or any agreement with Alfredo about the title. Following their separation, Miguel asked Cecilia to pay him approximately $80,000 to buy out his interest in the home. Cecilia sought legal advice and understood for the first time that the quitclaim deed meant that Miguel did not have an ownership interest in the home. Cecilia did not

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believe Miguel should receive any money from her for the home. When she signed the purchase documents, Cecilia believed the "family" owned the home, by which she meant herself, Miguel, and their daughter. Cecilia denied that there had been any agreement to place Miguel on the title or on the mortgage.

Miguel testified that, before the purchase of the home and before he signed the documents in November 2011, he and Cecilia had an agreement that the home was going to belong to both of them. Miguel understood that it was going to be "her house and mine for my daughter, and my brother [Alfredo] was only helping us with his credit." He did not expect Alfredo to have any real ownership interest in the home. He and Cecilia had talked about putting the home in both of their names sometime after the purchase.

At the time of the home's purchase, Miguel had approximately $2,500 in his bank account. Miguel contacted coworkers, friends, his brother Alfredo and other family members for money. Miguel stated he was able to "gather that $14,000 that we gave as the down payment," and he and Cecilia eventually paid back those loans.

Miguel went with Cecilia and Alfredo to the title company office in 2011, and there was a "big packet" of documents to sign. No one explained the documents to Miguel, but he signed the documents, including the quitclaim deed. There was no interpreter, and the person assisting Miguel at the signing did not speak Spanish. There was also no interpreter for his brother Alfredo. Miguel only vaguely remembered why he had to sign the quitclaim deed. He understood it was "[p]art of the title of the house," which Cecilia told him he had to sign in case "something happened to her." Miguel would not have signed the quitclaim deed if he had been told what it actually meant.

Miguel knew he was not on the title for the home, but he thought he was "going to be on the title because [he] was [Cecilia's] husband." At some point, he and Cecilia discussed changing the title and refinancing the home, but they did not because it was too expensive. Miguel was not a party to the loan on the home. Miguel made the monthly mortgage payments on the home until his separation from Cecilia.

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Judge Johnson admitted a number of exhibits into evidence, including the schedule of assets and debts that Cecilia had filled out as part of the dissolution, which included a copy of the quitclaim deed signed by Miguel.

On July 30, 2018, Judge Johnson gave an oral statement of decision. She found that the parties were married at the time the home was purchased and neither of them had sufficient money or the credit to buy it. It appeared Miguel was the one who had initiated the purchase of the home, had solicited the financing for the purchase, "got the loans[, and] got his brother involved."

Turning to Miguel's argument that Cecilia had breached her fiduciary duty to him, Judge Johnson stated that "since it was [Miguel's] idea and since he set the whole thing up, the only possible breach of fiduciary duty is the signature on the [quit] claim deed."

Judge Johnson did not find a breach of fiduciary duty. Judge Johnson stated there had been no undue influence in obtaining Miguel's signature on the quit claim deed, given that Miguel was the "leading force" in the transaction and appeared to "know what he was getting into." Judge Johnson further found that there was no unjust enrichment because Cecilia "doesn't have any more coming out of this than she had going into this," and she was still a co-owner of the home with Alfredo.

Judge Johnson noted the statutory presumption that the home was community property because it was purchased during the marriage. However, she found that this statutory presumption "was rebutted by the fact of the deed and the fact that husband's brother is on the deed, and the testimony in court supports the fact that the presumption of community property would be rebutted." She noted Miguel had watched his brother sign the deed, and Miguel had signed the quit claim deed and at "any time [could] have stopped." Judge Johnson characterized Miguel as a "smart man," who had "set this whole thing up."

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Judge Johnson declined to establish a constructive trust, because there was no evidence of fraud. She concluded that any trust would have to be a resulting trust.^[4] With respect to consideration, she found that Alfredo put in his "good credit and his name," which would impact his ability to purchase another home. This contribution constituted sufficient consideration for a contract.

Judge Johnson found the house was not community property but instead was Cecilia's separate property that she owned with Alfredo. Judge Johnson observed that the community had paid for the house and made all mortgage payments from 2011 to the present, so Moore/Marsden calculations^[5] might be needed related to the separate property interest.

Judge Johnson did not decide whether to impose a resulting trust because Alfredo was not then a party to the litigation. She observed there was "[m]aybe" a resulting trust and the "factors supporting a resulting trust are probably here" but that the "only problem with the resulting trust theory is that the resulting trust is against [Alfredo] and not against [Cecilia]."

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Judge Johnson ordered the proceedings stayed for 60 days to allow Miguel to decide whether to join Alfredo as a necessary party to the litigation. Judge Johnson explained that "[a]ll I am doing is saying the...