Distinguishing the cases of In re Marriage of Haines and Mathews, a California Appellate Court has ruled that a Trial Court did not err in finding that the family home acquired in Father’s sole name in order to qualify for a better loan rate was parties’ community property and for ordering Father to convey the family home to Mother and him as tenants in common. According to the Appellate Court, Father’s failure to abide by his promise to put Mother’s name on the title after the purchase was violation of his fiduciary duty and constituted constructive fraud.
In the case of Starr v. Starr, Mother and Father had two children during their marriage. When they sought to buy their family home in Glendora in late 1996, their lender told them they could qualify for a better interest rate if Father took title to the home in his name alone. Father provided $50,000 of his separate property funds for down payment on the family home, while Mother quit-claimed her interest in the home to Father before the close of escrow.
Represented by counsel, Father filed for divorce in April of 2004. His divorce petition listed family home as parties community property, but asked for reimbursement of his separate property contribution to its acquisition. In 2005, Father and Mother stipulated to child-support order based on DissoMaster calculation. Later, Mother and Father discovered that the calculation was incorrectly based on four children. In 2006, Trial Court modified child-support order to correct that error and reserved for trial Father’s request for reimbursement of $3,112 overpayment.
At trial, Father, represented by new counsel, argued that family home was his separate property, testifying that he and Mother always intended that it would be his separate property because he supplied the $50,000 down payment. Father stated that Mother quit-claimed her interest because of that understanding, but admitted that property taxes and mortgage payments were made with community property. Mother testified that she quit-claimed her interest because of lender’s advice, and that Father told her he would add her name to the title later. Mother said she did not worry when Father failed to do that because she believed that family home was theirs and she trusted Father. On cross-examination, Father admitted saying at deposition that he’d taken title in his name on lender’s advice. Father claimed not to remember whether his former attorney reviewed with him the details of his divorce petition, and said he probably hadn’t read it before he signed it.
In a statement of decision, Trial Court found that family home was community property and Father was entitled to California Family Code Section 2640 reimbursement of $50,000 down payment, and ordered Father to convey family home to himself and Mother as tenants in common. Relying on, among others, In re Marriage of Mathews (2005) 133 Cal.App.4th 624 [substantial evidence that Wife signed quitclaim freely and voluntarily trumps presumption of undue influence in Father’s taking sole title to family home during marriage] and In re Marriage of Haines (1995) 33 Cal.App.4th 277 [Husband exerted undue influence to get Wife to sign quitclaim deed to family home], Trial Court found that Mother did not sign quitclaim freely and voluntarily, but did so because of lender’s suggestion. Trial Court also determined that current child-support order was inadequate, increased it, and denied Father’s request for reimbursement of previously overpaid child support.
Father appealed, but California Court of Appeals has affirmed Trial Court’s decision. The Appellate Court finds that (1) neither Haines nor Mathews is applicable here; (2) critical distinction between Mathews and this case is that in Mathews, Wife "assumed" that Husband would put her on the deed, while here, Father "told" or "promised" Mother that he would do so; (3) under California Family Code Section 271 [spouses have fiduciary duty towards each other], where spouse uses confidence or authority to obtain unfair advantage, he or she breaches confidential relationship, triggering presumption of undue influence (coercive persuasion not necessary); (4) Mother quit-claimed her interest in family home in reliance on Father’s promise and her trust in him as her husband; (5) Father’s failure to add her name to title was constructive fraud and undue influence, constituting breach of fiduciary duty; (6) Trial Court’s finding regarding Mother’s free and voluntary execution of quitclaim was ambiguous; (7) Trial Court did not err in awarding Father $50,000 reimbursement under Family Code Section 2640; and (8) Trial Court’s ruling regarding reimbursement for overpaid child support was not abuse of discretion.