Litke O'Farrell, LLC v. Tipton
| Decision Date | 10 April 2012 |
| Docket Number | No. A132327.,A132327. |
| Citation | 204 Cal.App.4th 1178,139 Cal.Rptr.3d 548,2012 Daily Journal D.A.R. 4507,12 Cal. Daily Op. Serv. 3894 |
| Parties | LITKE O'FARRELL, LLC, Plaintiff and Respondent, v. Marcia TIPTON, Defendant and Appellant. |
| Court | California Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE
See Cal. Jur. 3d, Family Law, §§ 753, 768; Cal. Civil Practice (Thomson Reuters 2011) Family Law Litigation, §§ 5:30, 8:78; Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2011) ¶ 9:441 (CAFAMILY Ch. 9-E); Ahart, Cal. Practice Guide: Enforcing Judgments and Debts (The Rutter Group 2011) ¶ 3:25 (CADEBT Ch. 3-A); 11 Witkin, Summary of Cal. Law (10th ed. 2005) Community Property, §§ 200, 217.
Chiles and Prochnow, Kenneth H. Prochnow, Palo Alto, for Appellant.
Rossi, Hamerslough, Reischl & Chuck, San Jose, David Hamerslough, Richard B. Gullen, for Respondent.REARDON, Acting P.J.
Nondebtor spouse Marcia Tipton appeals from a postjudgment order granting respondent Litke O'Farrell, LLC (Litke) a charging order against what she asserts has become her separate property interest in certain partnerships and limited liability companies that were divided pursuant to a marital settlement agreement (MSA). The charging order was designed to satisfy a judgment entered against her husband, Richard Tipton. The trial court concluded that under Family Code 1 section 916, subdivision (a) ( section 916(a)), her interest in such property did not become shielded from creditors until entry of judgment of dissolution or separation, which occurred after Litke's charging liens in this case attached. We agree with appellant that upon entering into an enforceable MSA, the parties accomplished a division of their community estate such that the community property awarded to her became her separate property prior to attachment of the charging liens. Accordingly, we reverse the judgment.
In August 2009, the trial court entered judgment for $523,979.28 in favor of Litke and against Richard Tipton and others. We affirmed the judgment. ( Litke O'Farrell, LLC v. Tipton (Oct. 29, 2010, A126563, 2010 WL 4263748) [nonpub. opn.].)
On January 18, 2011, Litke commenced serving a motion to charge the interests of Richard Tipton and others in certain partnerships and limited liability companies. Actual service on Richard Tipton was effected January 24, 2011, the same date Litke filed the motion in court. Meanwhile, on January 21, 2011, notice was given that an action for dissolution of the Tiptons' marriage was filed December 15, 2010, and that the parties had executed an MSA with a signature and the effective date of January 18, 2011. The MSA divided the community property assets in question, confirming half to Marcia Tipton and half to Richard Tipton as their sole and separate property, while saddling Richard Tipton with sole responsibility for the judgment debt owed to Litke. The MSA also provided that at the time judgment of dissolution is obtained, the original of the MSA shall be attached to the stipulated judgment and the court shall be requested to (1) approve the agreement as fair and equitable; (2) order the parties to comply with its executory provisions; and (3) incorporate the MSA into the judgment of dissolution. Nevertheless, the MSA also stated that it would be independently valid and binding whether or not incorporated into a final judgment of dissolution.
On January 28, 2011, Litke served a second motion on Marcia Tipton and Richard Tipton, specifically charging the interests of Marcia Tipton in the various partnerships and limited liability companies subject to the first motion, and also charging both parties' interest in a newly disclosed entity.
The court entered judgment of dissolution incorporating the MSA on January 31, 2011.
Marcia Tipton opposed the motion for a charging order against her property. The trial court ruled in favor of Litke's charging motion; this appeal followed.
Appellant is adamant that the division of property occurred when the parties signed the MSA and it became effective, not when the court entered judgment of dissolution. We agree.
In general, the community estate is liable for debts incurred by either spouse before or during marriage and prior to dissolution of marriage or legal separation. (§§ 902, 910; Lezine v. Security Pacific Fin. Services, Inc. (1996) 14 Cal.4th 56, 63–64, 58 Cal.Rptr.2d 76, 925 P.2d 1002.)
Section 916(a)(2) in turn provides:
Under the plain terms of the statute, property received by a nondebtor spouse escapes liability for the debtor spouse's debt only “after division” of the community property. The question thus becomes: When does division occur?
Prior to enactment of the predecessor to section 916, a spouse who received community property after dissolution of marriage was still liable for community debts incurred by the other spouse during the marriage. ( Mejia v. Reed (2003) 31 Cal.4th 657, 665, 3 Cal.Rptr.3d 390, 74 P.3d 166.) That changed in 1984, at which time the Legislature enacted former Civil Code section 5120.160, providing in part ( Mejia v. Reed, supra, at p. 665, 3 Cal.Rptr.3d 390, 74 P.3d 166.)
The first sentence of section 916(a) leads us to section 2550, which states: “ Except upon the written agreement of the parties, or on oral stipulation of the parties in open court, or as otherwise provided in this division, in a proceeding for dissolution of marriage or for legal separation of the parties, the court shall, either in its judgment of dissolution of the marriage, in its judgment of legal separation of the parties, or at a later time if it expressly reserves jurisdiction to make such a property division, divide the community estate of the parties equally.” (Italics added.)
Litke argues that the division of property under sections 916 and 2550 does not occur prior to judgment. It maintains that the “[e]xcept upon the written agreement of the parties” language of section 2550 simply means that the parties can agree to divide the community estate unequally, but that “does not change the fact that it is the court that approves and effectuates a division by entering a judgment dividing the property.” Litke cites Mejia v. Reed, supra, 31 Cal.4th 657, 3 Cal.Rptr.3d 390, 74 P.3d 166 for this proposition,2 but what the opinion says simply is this: “ Whenever, as in this case, the parties agree upon the property division, no law requires them to divide the property equally, and the court does not scrutinize the MSA to ensure that it sets out an equal division.” ( Id. at p. 666, 3 Cal.Rptr.3d 390, 74 P.3d 166.) Thus the question remains: Is it the court or the parties that divides the community estate under section 2550 in the face of a written MSA?
Our fundamental task in construing statutes is to divine the Legislature's intent so as to carry out the purpose of the law. Undertaking this task, we do not construe statutes in isolation, but instead read every statute with reference to the entire scheme of law to which it belongs so that the whole is harmonized and retains effectiveness. ( In re Marriage of Harris (2004) 34 Cal.4th 210, 222, 17 Cal.Rptr.3d 842, 96 P.3d 141.)
As a general matter, our Family Code empowers a husband and wife to alter their property rights by a marital property agreement, which in turn can be recorded such that the recorded instrument has the same effect as a recorded grant deed. (§§ 1500, 1502, subd. (b).) The husband and wife thus can contract with each other at any time regarding property and, in a written agreement to separate, may provide for child and spousal support during separation or upon dissolution of marriage. (§§ 1620, 3580.) In the absence of fraud or other invalidity, property provisions of an MSA are valid and binding on the court. ( Adams v. Adams (1947) 29 Cal.2d 621, 624, 177 P.2d 265.) Indeed, the court does not have a role in approving or disapproving property divisions agreed to by the parties. Its only role is to accept the agreement and, if requested, incorporate the disposition into the judgment. ( in rE marriage of cream (1993) 13 cal.app.4th 81, 91, 16 cal.rptr.2d 575.) Thus, court approval in a dissolution proceeding is not a prerequisite to the enforcement of an MSA in an independent action, unless the agreement requires such approval. (See Sanborn v. Sanborn (1934) 3 Cal.App.2d 437, 441–442, 39 P.2d 830; Blair, California Marital Settlement and Other Family Law Agreements (Cont.Ed.Bar 3d ed. 2010) The Agreement in Its Legal Context, § 3.8, p. 82 (2011 update).)
Considering section 2550 in light of the above Family Code provisions, it is clear that the parties can divide community property pursuant to a written agreement, and that such agreement is enforceable without court approval. Hence, under section 2550, the court divides the community estate equally in its judgment of dissolution, legal separation or at a later time, unless the parties...
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