Marriage of Wilson CA2/5 ( 2021 )

Filed 3/25/21 Marriage of Wilson CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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 FIVE
In re Marriage of MARY S. JONES B300609
WILSON and MICHAEL A.
WILSON. (Los Angeles County
Super. Ct. No. BD530826)
MARY S. JONES WILSON,
Respondent,
v.
MICHAEL A. WILSON,
Appellant.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Rolf M. Treu, Judge. Affirmed.
Law Offices of Wendy L. Sheinkopf and Wendy L.
Sheinkopf, for Appellant.
Sall Spencer Callas & Krueger, Suzanne Burke
Spencer and Michael A. Sall; Devan Beck Law Group and
Devan Beck, for Respondent.
Mary Jones Wilson (Mary) and Michael Wilson (Michael)
used community funds to build a home on a parcel owned by a
trust created by Michael’s parents, Stanley Wilson (Stanley) and
Joan Wilson (Joan). Years later, when Mary and Michael
separated, a dispute arose as to whether the community
possessed an option to buy the parcel. The trial court held a
bifurcated trial on the issue of whether the parties entered into a
valid and enforceable lease with an option to buy the parcel in
1995 (the lease/option agreement), found the agreement valid,
and ordered Mary and Michael to cooperate in exercising the
option. Michael appeals this ruling and we consider (1) whether
the family court properly excluded evidence regarding Michael
and his parents’ intent when they signed the lease/option
agreement, (2) whether Mary terminated the lease/option
agreement when she commenced another lawsuit, and (3)
whether the family court erroneously ruled the trust currently
owns the parcel.
I. BACKGROUND
Mary and Michael married in 1979.1 Mary petitioned for
dissolution of the marriage in 2010. In November 2018, the
family court set a trial on property and debt division issues,
including ownership of real property located at 31626 Sea Level
Drive in Malibu, California (the Sea Level property).
1
Both Mary and Michael have been licensed to practice law
since the 1970s. Mary served as in-house counsel at several
companies before seeking opportunities as an arbitrator and
Michael spent his entire career at the Los Angeles County
District Attorney’s office.
2
The parties stipulated the family court would first
determine whether the community held an option to buy the Sea
Level property pursuant to the lease/option agreement. The
family court heard testimony from Mary, Michael, and Jeffrey
Donfeld (Donfeld), the attorney who drafted the agreement.
A. Mary and Michael’s Real Estate Transactions
At trial, Mary and Michael testified about three Southern
California properties where they lived during the marriage: a
home they purchased with community funds in 1980 on Eagle
Pass Drive in Malibu, California (the Eagle Pass property), a
home Michael’s parents owned on Carol Drive in West
Hollywood, California (the Carol Drive property), and the Sea
Level property.
Mary and Michael lived at the Eagle Pass property between
1980 and 1984, at which time they temporarily separated and
rented the property to a third party. When they reconciled, they
moved into the Carol Drive property. Mary testified the Carol
Drive property needed extensive renovation but she was
reluctant to invest community funds in this work because she
and Michael had no ownership interest in the property. Michael
assured her, however, that his parents would sell the property to
them “for a cheap price” if they “fix[ed] it up.” Michael disputed
all this, testifying Mary insisted on undertaking the renovations,
they did not pay rent to his parents, and his parents never
indicated they planned to give or sell the Carol Drive property to
them.
After a few years at the Carol Drive property, Mary and
Michael returned to the Eagle Pass property. In 1993, the Eagle
Pass property was damaged in a fire. Mary and Michael collected
3
approximately one million dollars in insurance proceeds. After
the fire at the Eagle Pass property, Mary and Michael moved to
the Sea Level property.
In 1995, soon after moving into the two-bedroom, two-
bathroom cottage on the Sea Level property, Mary and Michael
made plans to build a new home on the parcel using the
insurance proceeds from the Eagle Pass property. Mary testified
she told Michael she did not “want to invest a million dollars on
somebody else’s property” because she remembered her
expectations regarding Carol Drive and “[did not] want that
problem again.” The Sea Level property was then owned by the
Wilson Family Trust, with Michael’s parents Joan and Stanley as
trustees.
Michael consulted with Donfeld and asked him to prepare a
residential lease with an exclusive right and option to purchase
the Sea Level property. The lease/option agreement Donfeld
prepared at Michael’s direction states Mary and Michael would
pay annual rent of $19,200 in two installments each year. It
further gave Mary and Michael the exclusive option to purchase
the Sea Level property for $1,000,000 after the death of Michael’s
parents.2 The option would survive earlier termination of the
lease for any reason. The instrument also includes an integration
clause stating it “constitutes the entire understanding and
agreement of the parties . . . .”
Mary testified that Michael met with Joan and Stanley to
execute the document. She wanted to attend the meeting, but
Michael told her to stay home and watch the children. Michael
arrived home with two copies of the lease/option agreement
2
Both of Michael’s parents died before trial.
4
bearing his and his parents’ original signatures. Mary signed
both copies, made a photocopy for herself, and returned the
originals to Michael. She did not see the original documents
again, and she kept the copy she made in a safe deposit box at
her bank.
Michael’s testimony about the lease/option agreement was
quite different. He testified that although he and his parents
signed the lease/option agreement, they signed only one copy and
he never discussed the agreement with Mary or presented it to
her to sign. (As we will later discuss in more detail, the family
court did not allow Michael to present evidence that would
purportedly demonstrate he and his parents did not intend to
form a contract when they signed the instrument but signed it
just “in case” they later wanted to make a contract.)
According to Michael, he and Mary lived at the Sea Level
property pursuant to a lease executed prior to the lease/option
agreement. That lease provided for annual rent of $22,800.
When he was asked about a check to Joan as trustee for $9,600
(the biannual rent amount set forth in the lease/option
agreement) dated November 1, 1995 (the beginning of the lease
term defined in that agreement), and drawn on his and Mary’s
checking account, Michael said he could not recall what the
purpose of the check was.
In 1997, Mary and Michael purchased a strip of land
adjacent to the Sea Level property as joint tenants and tied the
strip to the Sea Level property. They then used the Eagle Pass
insurance proceeds to build a new home on the Sea Level
property.
5
B. The Family Court’s Ruling
The family court found the community possessed an
exclusive option to purchase the Sea Level property. The court
reasoned it “defies logic that [Mary] would permit the
expenditure of funds for the . . . construction of the Sea Level
residence” without an option to buy the property. The court
found Mary signed and saved a photocopy of the agreement when
Michael presented it to her. The court also rejected Michael’s
contention that Mary terminated the lease/option agreement in a
2015 lawsuit against Michael, Joan, and various trusts because
her declaratory relief cause of action in that case “affirm[ed] her
belief in the contract.”
The family court ordered Mary and Michael to cooperate in
exercising their option to purchase the Sea Level property. The
court remarked that “this ruling may help the parties with
respect to resolution of other matters. Obviously, the court’s
finding that this is a valid option given to the parties would
vitiate any subsequent granting or quitclaiming of, or any title
documents with respect to this property, so it takes priority in
terms of their relationship between the parties as to it.”
After the family court announced its ruling, Michael’s
attorney expressed her view that there was “another part of the
trial to commence.” Among other things, Michael’s attorney
argued the family court should decide the parties’ respective
interests in and the value of the Sea Level property at different
points in time, including the enforceability of a quitclaim deed
transferring a portion of Michael’s purported 100% interest in the
6
Sea Level property to the community; conduct a Moore3-Marsden4
analysis based on community contributions to and benefits
derived from the Sea Level property; calculate any Epstein5
credits due to Michael based on the use of separate property to
pay community debts; and calculate any Watts6 charges due to
Michael based on Mary’s use of the Sea Level property.
The family court concluded trial of these issues was not
immediately necessary. The court explained that “the lease
option is valid and it is the community’s interest in this property.
[¶] Therefore, whatever happens subsequent or what has
happened subsequent thereto, the court sees no basis for further
adjudication. The parties have the option. They have an equal
interest in this option, and they proceed from there. [¶] If they
exercise the option, and I’ve ordered them to cooperate in the
exercise of the option, they purchase the property from the trust
for the amount set forth. And what more is there to decide.” The
family court entered a judgment ordering the parties to cooperate
in exercising the option and reserving jurisdiction over all other
issues.
II. DISCUSSION
Michael contends the family court abused its discretion in
excluding evidence that Michael and his parents did not intend to
3
In re Marriage of Moore (1980) 28 Cal.3d 366.
4
In re Marriage of Marsden (1982) 130 Cal.App.3d 426.
5
In re Marriage of Epstein (1979) 24 Cal.3d 76.
6
In re Marriage of Watts (1985) 171 Cal.App.3d 366.
7
form a contract when they executed the lease/option agreement.
But Mary was not a party to any of the communications the
family court excluded, and that means those communications
were properly excluded as irrelevant: the existence of mutual
assent necessary to form a contract is determined based on the
parties’ outward manifestations of consent, not their privately
held intentions. Michael also argues that even if there was an
agreement, Mary terminated it when she sued Michael, Joan,
and others for anticipatory breach of contract. But that
argument fails because it mischaracterizes Mary’s lawsuit.
Lastly, Michael asks us to reverse the family court’s ruling that
the Sea Level property is currently owned by his parents’ trust.
The family court made no such ruling. The family court’s
remarks during the proceedings do reveal it assumed Mary and
Michael would exercise the option in favor of purchasing the Sea
Level property, but the court did not determine—and Mary does
not contend—the trust is the current owner of the Sea Level
property.7
A. The Family Court Properly Excluded Evidence of
Michael and His Parents’ Subjective Intent
Michael contends the family court misapplied the parol
evidence rule in excluding evidence that he claims would have
shown “[he] and his parents . . . never intended the [lease/option
agreement] to constitute a contract, and that in lieu thereof
7
Michael asks us to remand for trial of other issues.
Because the family court reserved jurisdiction over any
remaining issues, however, no remand is necessary.
8
another contract was entered into between them . . . .”8 Among
other things, Michael sought to introduce evidence that his
parents and their estate planning attorney did not approve of the
lease/option agreement, were contemplating other options to give
him an interest in the Sea Level property, and signed the
agreement “for convenience purposes only, in case [they] ever
decided to make an offer to Michael and Mary and thereafter use
the Lease Option Draft as a bona fide agreement.”
The parol evidence rule, however, was not the sole basis for
the family court’s exclusion of that evidence. For example, when
Michael’s attorney asked him whether “it was [his]
understanding when [he] signed the lease option document that
[he] was signing a binding contract,” the family court ruled “[h]is
understanding is irrelevant and also invades the parol evidence
rule.” We need not resolve the parol evidence question because
evidence of Michael and his parents’ unexpressed intent was
correctly excluded as irrelevant (and exclusion on parol evidence
grounds would be harmless for that same reason (Ajaxo, Inc. v.
E*Trade Financial Corp. (2020) 48 Cal.App.5th 129, 185)).
“An essential element of any contract is the consent of the
parties, or mutual assent. (Civ. Code, § 1550, subd. 2, 1565,
subd. 2.)” (Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 270.)
“‘“The existence of mutual consent is determined by objective
rather than subjective criteria, the test being what the outward
8
Michael asserts in his reply brief that the family court also
erred in excluding evidence that Mary “ratifi[ed] . . . other deeds
from Michael’s parents granting him full and sole ownership of
the Sea Level property.” The argument is belatedly raised and
forfeited for that reason. (Habitat & Watershed Caretakers v.
City of Santa Cruz (2013) 213 Cal.App.4th 1277, 1292, fn. 6.)
9
manifestations of consent would lead a reasonable person to
believe. [Citation.] Accordingly, the primary focus in
determining the existence of mutual consent is upon the acts of
the parties involved.”’ [Citations.]” (Monster Energy Co. v.
Schechter (2019) 7 Cal.5th 781, 789.)
“Under California law, the subjective, unexpressed beliefs
of the parties do not serve as the basis for whether or not a
contract is formed.” (Alexander v. Codemasters Group Ltd. (2002)
104 Cal.App.4th 129, 150, disapproved on another ground in Reid
v. Google, Inc. (2010) 50 Cal.4th 512, 524.) “In the absence of
fraud, mistake, or another vitiating factor, a signature on a
written contract is an objective manifestation of assent to the
terms set forth there. [Citation.] If the terms are unambiguous,
there is ordinarily no occasion for additional evidence of the
parties’ subjective intent. [Citation.] Their ‘actual intent,’ for
purposes of contract law, is that to which they manifested assent
by executing the agreement.” (Rodriguez v. Oto (2013) 212
Cal.App.4th 1020, 1027 (Rodriguez).)
Both Mary and Michael testified that Mary was not present
when Michael and his parents signed the agreement. Michael
further testified that he never discussed the agreement with
Mary. Whatever reservations or qualifications might have been
shared among Michael and his parents at signing, there is no
evidence that these were communicated to Mary. As far as Mary
was concerned, the only outward manifestation of Michael and
his parents’ intentions was their signatures on the agreement.
Their intent, “for purposes of contract law, is that to which they
manifested assent by executing the agreement.” (Rodriguez,
supra, 212 Cal.App.4th at 1027.)
10
B. Mary’s 2015 Lawsuit Did Not Terminate the
Lease/Option Agreement
In 2015, Mary sued Michael and Joan individually and in
their capacities as trustees of various trusts with interests in the
Sea Level property. Mary’s complaint alleged Joan and Stanley
executed the lease/option agreement on behalf of the family trust,
which then owned the Sea Level property, and the agreement
was “never revoked, rescinded, terminated, or withdrawn.”
Based on a declaration Joan submitted in the dissolution
proceedings, however, Mary alleged Joan and others disputed
whether the lease/option agreement is a valid contract.
Accordingly, she sought a declaration that the lease/option
agreement is valid and enforceable. In the alternative, Mary
alleged fraud, unjust enrichment, promissory estoppel, breach of
fiduciary duty, and aiding and abetting breach of fiduciary duty
based on the defendants’ misrepresentations concerning, among
other things, the existence of a valid lease/option agreement.
Michael contends Mary sued on a theory of anticipatory
breach of the lease/option agreement, which would operate in
effect as a repudiation of the agreement and a request for civil
damages instead. (See Romano v. Rockwell Internat., Inc. (1996)
14 Cal.4th 479, 489 [“In the event the promisor repudiates the
contract before the time for his or her performance has arrived,
the plaintiff . . . may ‘treat the repudiation as an anticipatory
breach and immediately seek damages for breach of contract,
thereby terminating the contractual relation . . .’”].) That,
however, is factually incorrect: Mary’s lawsuit expressly sought a
declaration that the lease/option agreement is valid and
enforceable. Further, as to the non-declaratory relief causes of
11
action in the lawsuit, none turned on whether the lease/option
agreement was actually enforceable. Mary’s fraud claim, for
instance, was based in part on the allegation that the defendants
falsely represented that the lease/option agreement is valid and
enforceable.
Michael also asserts, putting aside the contrary text of the
complaint, that Mary’s election to terminate the lease/option
agreement is revealed in other documents filed in the 2015
litigation. In that litigation, Michael contended Mary’s causes of
action were time-barred because she had a claim of anticipatory
breach of contract as early as 2009.9 (See Jones v. Wilson (Dec.
26, 2017, B277392) [nonpub. opn.] (Jones).) In response, Mary
argued an anticipatory breach would in fact toll the statute of
limitations and her causes of action were therefore not time-
barred “because they accrued based on anticipatory breach.”
Mary’s argument as to when her causes of action accrued did not
indicate that she sought to terminate, rather than enforce, the
lease/option agreement. Rather, she reiterated her purpose to
“obtain a declaration of [her] rights under the [lease/option
agreement]” in the same document.
C. The Family Court Did Not Decide the Trust Created
by Michael’s Parents Now Owns the Sea Level
Property
The family court declined to adjudicate issues relating to
the Sea Level property other than whether Mary and Michael
9
The trial court sustained a demurrer to Mary’s complaint
on statute of limitations grounds. (Jones, supra, B277392.) This
court affirmed in part and reversed in part. (Id.)
12
possess a valid option to purchase the property: “[T]he court sees
no basis for further adjudication. The parties have the option.
They have an equal interest in this option, and they proceed from
there.” In its judgment that expressly reserved decision over any
other remaining issues,10 the family court held the lease/option
agreement is “a valid and enforceable agreement and is a
community asset, held by each party equally, and each Party
shall cooperate with the other in whatever exercise is intended to
be made of the option.”
Michael seizes upon stray remarks to contend the family
court also made a finding as to the current owner of the Sea Level
property. In particular, Michael emphasizes the family court’s
comments that the option “would vitiate any subsequent granting
or quitclaiming of, or any title documents with respect to this
property, so it takes priority in terms of their relationship
between the parties as to it” and that “[i]f [Mary and Michael]
exercise the option, and I’ve ordered them to exercise the option,
they purchase the property from the trust for the amount set
forth.”
In context, the family court’s comment about post-option
transfers being vitiated by the option was merely an observation
that, whoever currently owns the Sea Level property, they are
bound to sell to Mary and Michael pursuant to the option.
Michael’s attempt to read more into these remarks makes little
sense when, as he acknowledges, the family court “did not receive
10
Among the issues that Michael believes the family court
should have decided (but which the court may still decide
pursuant to the reservation of jurisdiction in the judgment) are
Family Code section 2640 reimbursement rights, Epstein credits,
Watts charges, and Moore-Marsden analyses.
13
any testimony as to current or other ownership and the states of
title as to the Sea Level property . . . .” The family court’s
suggestion that Mary and Michael would be buying the Sea Level
property “from the trust” must be read in the same light. There
was no argument at trial that the Sea Level property is still
owned by Michael’s parents’ trust. Indeed, Mary’s counsel
argued that “[Michael] as the fee holder is subject to the option.”11
None of these comments can be plausibly construed as a ruling
that Michael’s parents’ trust is the current owner of the Sea
Level property.
11
Another remark Michael characterizes as a “ruling” by the
family court as to the current ownership of the Sea Level
property is even more clearly an explanation that the family
court was not ruling on the current ownership of the property:
“[Michael’s trial attorney]: The current ownership interest
is by title and deed, the quitclaim. And if the quitclaim deed is
deemed valid, then there’s 75/25 percent interest[.] 75 percent is
in Michael’s and 25 percent Mary’s.
“THE COURT: You’re presuming that any of these
transfers, as the court said, have any relevance whatsoever.
They are subject to the original superseding option period. There
is no title to this property currently in the party’s [sic]. There’s
nothing to transfer. There was nothing to transfer. [¶] The
option is what their ownership interest is or their—yes, their
ownership interest is. That is what the court has determined,
that that is a community property interest . . . .”
14
DISPOSITION
The family court’s interlocutory judgment is affirmed.
Mary shall recover her costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
BAKER, Acting P. J.
We concur:
MOOR, J.
KIM, J.
15