Filed 8/27/18 Marriage of Sesti and Ishaque CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

In re the Marriage of MARY and SALEEM ISHAQUE.

MARY SESTI,

Respondent,

v.

SALEEM ISHAQUE,

Appellant.

D073101

(Super. Ct. No. ED96635)

APPEAL from an order of the Superior Court of San Diego County, Thomas Ray Murphy (Ret.), Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Affirmed.

Stephen Temko for Appellant.

Nordhoff Bengfort and Steven G. Nordhoff for Respondent.

Saleem Ishaque (Husband) and Mary Sesti (Wife) entered into a premarital agreement (Agreement) approximately one month before they married. The Agreement contains a provision in which each spouse waived any right to reimbursement for separate property he or she contributed into a “designated” “Household Account.” The family court found that the parties designated a Household Account through their conduct; specifically, by adding Wife as an owner of the sole account from which the couple paid all their living expenses. Husband challenges this construction on appeal, maintaining the parties could only designate a Household Account by specifically naming or labeling an account “Household Account.” We find no error in the family court’s construction.

Husband also contends the family court erred by failing to consider parol evidence he argues would have shown the reimbursement waiver for contributions into the Household Account was narrower than the family court concluded. Although we agree the family court should have provisionally received and considered the proffered parol evidence, we conclude Husband suffered no prejudice because his proffered evidence was inadmissible because it impermissibly contradicted (rather than elucidated) the waiver provision.

Finally, Husband contends the court erred by concluding the parties could (and did) validly waive their spousal fiduciary duties, and by finding Wife rebutted the presumption of undue influence that arose from the breach of these duties that allegedly occurred when she was added as an owner of the Household Account. We conclude substantial evidence supports the latter conclusion, and therefore need not consider the first.

We therefore affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Marriage and Premarital Agreement

Husband and Wife met in 1999 while working at a psychiatric hospital. Husband was a psychiatrist who earned substantial income through his medical practice, related consulting services, and passive investments in health care facilities. Wife was a nurse. They began dating in September 1999, and began cohabiting in Husband’s residence in Coronado in January 2000.

Husband and Wife had each previously been married and gone though “a bad divorce situation.” Therefore, if they were to marry, Husband and Wife wanted a premarital agreement to specify in advance their respective rights with respect to separate and community property so they could “get out of the relationship clean” without “fighting and spending money and time.” In August 2003, their tax attorney prepared an initial draft of the Agreement, and advised Husband and Wife to have their respective family law attorneys review and approve it. Husband and Wife retained separate counsel—each a certified family law specialist—to negotiate the Agreement on their behalf.

On April 8, 2004, Husband and Wife signed the Agreement, which took effect when they married on May 1, 2004. The Agreement indicates Husband was then 54 years old and had separate property worth more than $24 million, and Wife was 46 years old and had separate property worth about $38,000.

The parties acknowledged in section 4 of the Agreement that they were deviating from California’s community property law, which would ordinarily have deemed either spouse’s earnings during the marriage to be community property rather than the earner’s separate property. To that end, in section 4.6(e), Husband agreed that all of Wife’s earnings during marriage would remain her separate property. Likewise, in section 4.7(e), Wife agreed that all of Husband’s earnings during marriage would remain his separate property.

In consideration of Wife’s waiver of her claim to a community property interest in Husband’s earnings during marriage, Husband agreed in the Agreement (Sections 4.7(e) and 5.6) to convey to Wife a one-half ownership interest in certain real property in El Cajon (the Tombstone Property) that was his separate property before marriage, provided they remained married and cohabiting for more than two years. Husband had about $310,000 equity in the Tombstone Property at the time of marriage. In section 5.6, Husband expressly “waive[d] his right to reimbursement to which he should be entitled pursuant to Family Code Section 2640 for his separate property interest and/or contributions to the acquisition, payments for improvements, and principal pay down of any deeds of [trust] in connection with” the Tombstone Property.

The Agreement also specifies the amount of spousal support Wife would receive in the event of dissolution: a lump sum payment of $20,000 per year of marriage, plus $100,000 if the marriage exceeded 10 years.

Section 5 of the Agreement specifies the various means by which “community property may be created during . . . marriage.”

Section 5.2 addresses jointly titled property, and provides: “Any property, the written title to which is in the name of both Parties, shall be community property.”

Section 5.4 addresses the treatment of earnings and bank accounts in the event of separation, and provides:

“5.4 Earnings and Joint Bank Accounts Upon Separation. If the Parties shall separate with the intent to dissolve their marriage, then any income from before or after the date of separation shall be the separate property of the earning Party. In the event that the Parties shall separate with the intent to dissolve the marriage, then all joint bank accounts shall be severed, and, after payment of any joint debts, shall be distributed equally to the Parties. To the extent either Party contributes that Party’s separate property funds into those joint bank accounts, those contributions shall be deemed gifts by the contributing Party to the community and shall not entitle the contributing Party to any separate interest in those accounts or any reimbursement from the community property.”

Sections 5.7 through 5.9 of the Agreement address investment opportunities. With respect to new business enterprises or active investments established during the marriage, the parties agreed to “prepare and execute an agreement which shall establish the character of the new business as separate or community property and shall define their respective rights therein.” Absent such an agreement, the Agreement generally allowed for tracing of either spouse’s separate property investment in a new enterprise.

Section 5.10 of the Agreement addresses living expenses and a “Household Account.” We quote it at length because it is central to this appeal:

“5.10 Living Expenses and Household Account. The Parties hereby agree that should either of them contribute any of his or her separate income or property (as defined in this Agreement) for purposes of defraying the costs of living expenses to achieve or maintain the standard of living desired by them, the contributing Party shall have no right thereafter to seek reimbursement for all or any part of such contributions unless otherwise agreed to by the Parties in a writing signed by both of them. . . .

“The Parties hereby state their intention to establish a common account to be designated as the ‘Household Account.’ Said account is intended to receive contributions from each Party to defray the costs of living expenses. The Parties shall fund the common Household Account which shall be deemed community property, to which [Husband] shall make monthly contributions in an amount equal to the sum of the parties’ reasonable living expenses, with said funds being used to pay the parties’ monthly expenses. The parties agree that [Wife] shall not be required to contribute funds to the household account from the monthly installments above provided. To the extent either Party contributes the Party’s separate property funds into the Household Account, such contributions shall be deemed to be gifts by the contributing Party to the community and shall not entitle the contributing Party to any separate interest in the Household Account or any reimbursement from the community property.

“In the event any community property funds deposited in the Household Account are used for or contributed to the separate property of either Party, with the written consent of the other Party, such funds shall be deemed an irrevocable gift by the community to the Party owning said separate property. The community shall not be entitled to any right of reimbursement or interest on such gifts.

“To the extent any community funds are contributed to the acquisition of new business interests or other property, then such new business interests or other property shall be deemed the community property of the Parties.”

Section 15 of the Agreement governs property transmutations when other Agreement provisions do not otherwise apply:

“Section 15. Transmutation. Except as otherwise specifically provided in this Agreement, the property or interests therein, now owned or hereafter acquired by the Parties, which by the terms of this Agreement are classified as the separate property of one of them, can become the separate property of the other or the community or jointly-owned property of the Parties only by a written instrument specifically indicating that the character of the property is changing, executed by the Party whose separate property is thereby reclassified.”

Dissolution Proceedings

Wife filed a petition for legal separation on July 28, 2015. Husband filed a response requesting dissolution. The parties stipulated to the appointment of Pro Tem Judge Thomas Murphy, who entered a status-only judgment of dissolution on November 9, 2016.

In February 2017, the parties stipulated to the separation date (May 23, 2016), the amount of spousal support owed to Wife ($340,000), and the validity of the Agreement (subject to certain disputed interpretation issues). The parties also stipulated to a bifurcated trial on disputed issues regarding the Household Account discussed in section 5.10 of the Agreement. Specifically, the parties stipulated to trial of the following issues:

“a) [W]hether the Wells Fargo account ending in 3498 is/was a ‘joint account’ and/or ‘[H]ousehold Account’ as contemplated by any provision of the Premarital Agreement, includ[ing] but not limited to Paragraphs 5.2, 5.4 and 5.10 of the Premarital Agreement;

“b) [W]hether and to what extent the funds deposited into the Wells Fargo account ending in 3489 commencing April 3, 2008, and thereafter became the community property of the Parties or remained the separate property of either Party;

“c) [W]hether and to what extent either Party would be entitled to reimbursement pursuant to Family Code section 2640 for funds deposited into the Wells Fargo account ending in 3489 commencing April 3, 2008, under the terms of the Premarital Agreement;

“d) [W]hether and to what extent either Party would be entitled to trace separate property claims relating to separate property funds deposited into the Wells Fargo account ending in 3489 commencing April 3, 2008, under the terms of the Premarital Agreement[;]

“[e)] [W]as there a transmutation of the account and funds to community property when wife’s name was added to the account on April 3, 2008; and

“[f)] If so, did wife breach a fiduciary duty to husband when her name was added to the account?”

Trial was conducted over two days (April 26-27, 2017), during which Wife, Husband, and their respective forensic accounting experts testified about the couple’s finances and the disputed Household Account.

Wife’s Case

Wife testified that early in the marriage she assisted Husband’s bookkeeper with reconciling the bank accounts and expenses associated with his various business interests. Wife estimated there were between four and eight of these accounts, as well as an account at Wells Fargo Bank that ended in 3489 (Account 3489). Wife had signing authority on many of the business accounts, but she was not listed as an owner on any account.

Wife explained Husband opened Account 3489 during the marriage, in November 2005. Initially, Wife had neither signing authority nor an ownership interest in the account. All of Husband’s salaries were directly deposited into Account 3489, and Wife managed the payment of household expenses from this account. Wife considered the following expenses to be household expenses: the mortgage on their primary residence, utilities, food, clothing, credit card bills, vacations, payments to ranch hands at their Descanso property (their primary residence), construction of a new residence, and purchase and operating expenses for a cattle ranch they purchased in Wyoming during the marriage. Wife explained she “consider[ed] the [Wyoming] ranch to be part of [her] lifestyle” because she and Husband purchased it after honeymooning in Wyoming, and visited it together several times per year.

Wife eventually took over all bookkeeping functions from the outside bookkeeper. On April 3, 2008, Wife was added as an owner on Account 3489. She did not recall at trial whose idea it was to add her to the account, but she described how it happened: “I went to the bank under the instruction of [Husband] that I would be a joint owner on the account. I picked up the paperwork and brought it back to him. He looked at it and signed it.” Wife returned the completed form to the bank. Wife and Husband did not discuss the Agreement when Wife was added to the account.

Account 3489 was the couple’s first and only joint bank account. Wife acknowledged on cross-examination that she and Husband did not open Account 3489 (or any other account) together, that the bank’s records do not refer to the account by the name “Household Account,” and that the couple did not specifically name the account “Household Account” in their QuickBooks bookkeeping software.

Wife’s forensic accounting expert testified he was asked “to summarize the transactions into and out of [Account 3489]” between the time Wife was added to the account and September 30, 2015. The expert determined that during the relevant period $6,718,306 flowed into the account (primarily from Husband’s earnings), and $6,907,033 flowed out of the account. Of the expenditures, the expert determined approximately $5 million were attributable to the following expense categories: $1,519,093 for “self-evident household” or daily living expenses; $501,567 for mortgage payments on the couple’s primary residence; and $2,946,225 for expenses associated with the Wyoming ranch.

Husband’s Case

Husband testified he and Wife never “established” the Household Account contemplated by section 5.10 of the Agreement because they never established “any account labeled Household Account.” (Italics added.)

Husband explained he previously had an account at Union Bank from which he paid living expenses. Wife asked him to move the account to Wells Fargo because that bank had a branch close to their house, whereas Union Bank did not. Husband opened Account 3489 at Wells Fargo in his own name on November 2, 2005. He acknowledged that essentially all his earnings were deposited into this account, and all living expenses were paid from it. Husband defined living expenses as “[m]ainly food, clothing, [and] shelter.” In contrast to his various business accounts, Husband said of Account 3489: “It’s the only personal kind of account that everything flows through there and we use it. We paid all the bills from there, we paid the tax from there.”

According to Husband, Wife took over all bookkeeping functions for his business accounts and Account 3489 sometime around 2005. In 2008, she asked Husband to put her on title to Account 3489 for convenience (so Husband would not have to keep signing all the checks) and for estate planning purposes (“to protect her from not having any cash when [Husband] die[s]”). She presented him with the bank’s “relationship change application” form, which he signed. Husband testified he did not believe that by adding Wife to Account 3489 they “were creating the [H]ousehold [A]ccount described in the premarital agreement,” nor did he intend “to change the account that [he] believed was [his] separate property into community property.” Otherwise, he would not have added Wife to the account. After Wife was added to Account 3489, the couple continued to use the account in the same manner as before.

On cross-examination by Wife’s counsel, Husband acknowledged Wife had signing authority on at least one other account on which she was not listed as an owner.

The family court then examined Husband extensively regarding his understanding of the significance and effect of the Agreement:

“Q. Doctor, am I correct that you were married once before?

“A. Yes, sir.

“Q. And that the divorce that you had with your first wife was a distasteful experience?

“A. Yes, sir, your Honor.

“Q. It cost a lot of money?

“A. Yes, your Honor.

“Q. And you ended up, at least according to your conclusion, that she received more than you did from the division of your estate?

“A. Yes, your Honor.

“Q. And so you were [wary] of going into a new marriage without having a premarital agreement?

“A. Yes, sir.

“Q. Is that right?

“A. Yes.

“Q. So you went to an attorney?

“A. Correct.

“Q. And you . . . requested that that attorney assist you with a prenuptial agreement?

“A. Yes. [¶] . . . [¶]

“Q. . . . You signed [the Agreement], am I correct?

“A. Yes.

“Q. Your signature was notarized?

“A. Yes.

“Q. You understood the significance of this agreement?

“A. Yes.

“Q. It was an important agreement?

“A. Yes.

“Q. And it’s stated on page 36 that you had more than seven days between the time of the last draft and the time you signed the agreement. You had that agreement in your hand for seven days; is that right? That’s what it says.

“A. Yes.

“Q. You read this agreement, didn’t you?

“A. I did.

“Q. And you read it and the lawyer that you hired assisted you and went over each provision[,] is that right?

“A. Yes.

“Q. And [at] the bottom it says, ‘That we affirm that it is our intention that the terms of this agreement be enforced literally, regardless of the circumstances, and we understand that the future is unknown, but we’re both intelligent adults with the ability to make decisions as to our future financial relationship and exercise that right’; am I correct?

“A. Correct.

“Q. You were concerned sufficiently when you first got married that you made sure that you signed all the checks, right?

“A. Yes.

“Q. You were going to sign the checks. That went on with you signing the checks up through—from when you first got married until 2008?

“A. Correct.

“Q. And you purchased property during that period of time after you were married but before 2008?

“A. Yes.

“Q. And when you purchased things, you put them in your name?

“A. My personal trust.

“Q. You put it in your trust, you didn’t put it in your wife’s name?

“A. No.

“Q. You understood the significance of putting it in her name, right?

“A. Yes.

“Q. You wouldn’t do that?

“A. Not going to do that.

“Q. I understand.

“A. We did that with some.

“Q. Some of them?

“A. Right.

“Q. But you understood when you were doing it [¶] . . . [¶] when she gave you . . . the relationship change application, it’s the one that put her name on the Wells Fargo account, you understood that her name was going to go on the account?

“A. Yes.

“Q. After that—and that you understood that she was going to be signing?

“A. Yes.

“Q. And after that she did in fact sign, in essence, all the checks?

“A. All the checks.

“Q. Up until the time the two of you separated?

“A. Yes.

“Q. And you knew she was doing that?

“A. Yes.

“Q. What in your opinion is a household account?

“A. Household account, like I said, buying food, clothing, shelter. [¶] . . . [¶]

“Q. Money would go in and payments would go out?

“A. Yes.”

Husband’s forensic accounting expert observed that, based on his review of the business and personal banking records, Account 3489 was the only joint account that existed during the marriage, and there was no account specifically named “Household Account.” However, he acknowledged Account 3489 was the only account he identified “that has a substantial amount of household expenses being paid.” He further acknowledged there is no accounting “rule book” for determining whether an account’s “primary purpose” is paying living expenses.

Closing Arguments

The family court allowed counsel to address during closing arguments whatever issues they deemed appropriate, but also asked that Wife’s counsel address whether a fiduciary duty existed between Husband and Wife regarding Account 3489 transactions and “whether there is a presumption of undue influence as a result of these transfers.” The court asked Husband’s counsel “to focus on” sections 5.2, 5.4, and 5.10 of the Agreement. Specifically, the court asked counsel to address the following issues:

“[W]ould you describe a household account as one from which living expenses and utilities, mortgage, credit card, auto, clothes, et cetera, [are] paid? Is that a household account? [¶] Were these paid from [Account 3489]? [¶] And is there another account between April ’08 and May of ’16 from which these expenses were paid? [¶] . . . [¶] Can a household account make investments in real estate?”

Wife’s counsel argued fiduciary duty principles did not apply because the Agreement (1) was entered into before marriage when no fiduciary duties existed, (2) expressly contemplated the Account 3489 transactions at issue, and (3) included express reimbursement waivers for separate property contributions toward living expenses. And, in any event, counsel argued that even if Wife owed Husband a fiduciary duty, the presumption of undue influence that attaches to interspousal transactions was rebutted when Husband ” ‘freely and voluntarily made the transaction with the knowledge of all the facts and a complete understanding of the effects of the transaction,’ ” as evidenced by his testimony in response to the court’s direct questioning.

Addressing the Household Account issue, Wife’s counsel argued that the “only way . . . the Court could say [section] 5.10 does not apply in this case is by saying there is a written requirement that you had to put [‘]household account[‘] on the bank statement or [section] 5.10 does not [apply]. That would seem to . . . be reading something into the premarital agreement that is not there.” Otherwise, counsel observed that all the couple’s living expenses were paid from Account 3489, and section 5.10 included two express reimbursement waivers, the first of which is not contingent on funds being deposited into a Household Account.

Husband’s counsel emphasized sections 4.6 and 4.7 of the Agreement, which define the parties’ separate property rights. He argued the only express reimbursement waiver under Family Code section 2640 relates to Husband’s grant of an interest in the Tombstone Property under section 5.6 of the Agreement.

Husband’s counsel argued Wife obtained a presumptively unfair advantage by being put on title to Account 3489, which presumption was not rebutted in light of Husband’s testimony that he did not appreciate the impact of adding Wife to the account.

As to the merits of Husband’s claim to a reimbursement right for contributions he made to Account 3489, his counsel argued that (1) although section 5.2 provides that any jointly titled property is community property, nothing in that provision alters Husband’s right to trace his separate property contribution and seek reimbursement under Family Code section 2640; (2) although section 5.4 provides that a spouse’s separate property contributions into joint accounts are deemed nonreimbursable gifts to the community, the provision relates only to separate property contributions made during the separation process; and (3) “[f]or an account to qualify as an account described in [section] 5.10, that account must be specifically designated as a household account” such that a Household Account cannot be “accidentally create[d].”

Following closing arguments, both parties requested a written statement of decision.

The Family Court’s Rulings

On May 26, 2017, the family court issued a 17-page statement of decision, which the court later deemed its tentative ruling. The court allowed the parties to file requests for a further statement of decision regarding specific issues addressed in the tentative ruling. Husband and Wife each filed such requests, and the court issued separate rulings and findings in response to each request.

Ultimately, on July 19, 2017, the family court issued a 25-page final statement of decision. The court found Account 3489 was the Household Account contemplated by section 5.10 of the Agreement. The court explained:

“[Account 3489] was never specifically designated at Wells Fargo or in the parties’ QuickBooks account as a ‘household account.’ Its only written designation was [‘]Wells Fargo account . . . 3489.[‘] [Account 3489] was the only account used by the parties for household expenses. The parties had no account specifically designated as ‘Household Account.’

“All of the parties’ living expenses were paid from [Account 3489]. Conservatively, over $1,000,000 of household expenses were paid from [Account 3489] after April 3, 2008. . . . [Account 3489] was also used for investments and the payment of bills that were not household expenses . . . as anticipated in Section 5.10, paragraph 4, of the Agreement.

“Section 4 of the [Agreement] states the . . . [Agreement] . . . is intended to be plainly interpreted.

“[Account 3489] was the only account in both parties’ names. The Court finds [Account 3489] is a ‘joint account’ pursuant to the parties’ stipulation; and [Account 3489] was/is a ‘household account’ as contemplated within section 5.10 of the [Agreement].” (Italics added; footnote omitted.)

The family court further found that although the parties had stipulated that the funds Husband deposited into Account 3489 were initially his separate property, the funds were transmuted into community property by virtue of sections 5.2, 5.4, and 5.10 of the Agreement when Husband deposited them into Account 3489. The court found these provisions trumped the Agreement’s default transmutation provision (section 15) because of the latter’s express limitation that it applies “[e]xcept as otherwise specifically provided in this Agreement.”

Based on these findings, the family court concluded “[t]here was no right of reimbursement for any deposit of separate property into [Account 3489] pursuant to Sections 5.4 and 5.10 of the [Agreement]—a contract between the parties.” The court found these provisions included “an actual waiver of reimbursement,” not an “implied waiver.” Because of this ruling, the court found it unnecessary to address Husband’s request to trace his separate property contributions to Account 3489.

Turning to the fiduciary duty issue, the family court concluded that although Wife “gain[ed] an advantage when [Husband] agreed her name could be added to [Account 3489]” because it transmuted into community property the funds then on deposit and all future deposits into that account, the Agreement essentially “negate[d]” the fiduciary duty provisions of Family Code section 721. The court also found (in its ruling on Wife’s request for a further statement of decision) Wife had rebutted any presumption of undue influence arising from the Account 3489 transactions.

DISCUSSION

I. Household Account
II.
Husband challenges the family court’s finding that Account 3489 constitutes the Household Account contemplated by section 5.10 of the Agreement such that he is not entitled to reimbursement of his separate property funds that flowed through this account. He reasons such an account could only have been established by specifically naming the account a “Household Account.” We disagree.

Premarital agreements are enforceable contracts subject to the rules applicable to the interpretation of contracts. (In re Marriage of Bonds (2000) 24 Cal.4th 1, 13.) “In interpreting a written agreement, we ‘look first to the language of the contract . . . to ascertain its plain meaning or the meaning a layperson would ordinarily attach to it.’ [Citation.] ‘A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ (Civ. Code, § 1636.) The intent is to be inferred, if possible, solely from the written provisions of the contract. (Civ. Code, § 1639.) Language in a contract must be interpreted as a whole and in the circumstances of the case, and cannot be deemed ambiguous in the abstract.” (In re Marriage of Facter (2013) 212 Cal.App.4th 967, 978, italics omitted; see In re Marriage of Minkin (2017) 11 Cal.App.5th 939, 948 (Minkin).)

When a contract term is ambiguous, the trial court may admit extrinsic evidence to construe the term if the extrinsic evidence ” ‘supports a meaning to which the language is reasonably susceptible . . . .’ ” (In re Marriage of Thorne and Raccina (2012) 203 Cal.App.4th 492, 503.) Our standard of review turns on whether the family court considered extrinsic evidence. (Minkin, supra, 11 Cal.App.5th at p. 948.) “Where no extrinsic evidence is introduced, or the extrinsic evidence is not in conflict, we independently construe the agreement. [Citation.] Where competent extrinsic evidence is in conflict, we uphold any reasonable construction by the lower court.” (In re Marriage of Schu (2014) 231 Cal.App.4th 394, 399; see Minkin, at p. 948.)

We agree the term “designate” is ambiguous as used in section 5.10 of the Agreement and, thus, the family court properly considered extrinsic evidence (testimony of the parties and their respective experts) in construing it. We conclude substantial evidence supports the court’s construction.

As noted, section 5.10 pertaining to the Household Account reads:

“The Parties hereby state their intention to establish a common account to be designated as the ‘Household Account.’ Said account is intended to receive contributions from each Party to defray the costs of living expenses. The Parties shall fund the common Household Account which shall be deemed community property, to which [Husband] shall make monthly contributions in an amount equal to the sum of the parties’ reasonable living expenses, with said funds being used to pay the parties’ monthly expenses. The parties agree that [Wife] shall not be required to contribute funds to the household account from the monthly installments above provided. To the extent either Party contributes the Party’s separate property funds into the Household Account, such contributions shall be deemed to be gifts by the contributing Party to the community and shall not entitle the contributing Party to any separate interest in the Household Account or any reimbursement from the community property.”

The parties dispute the meaning of this passage. Husband contends an account can only be “designated as the ‘Household Account’ ” if the account is specifically named or labeled as such. He claims this is the indisputable, unambiguous meaning of “designated.” However, he cites no specific authority to support this claim. Nor does he explain why the Agreement did not use the terms “named” or “labeled” if that is what the parties had intended.

Wife, on the other hand, contends the meaning of “designated” is not so narrow, and that the parties designated Account 3489 as the Household Account by virtue of their conduct. She maintains they did all the things with Account 3489 that section 5.10 contemplated of a Household Account (i.e., they established a common account into which Husband’s separate property was deposited for purposes of defraying the cost of living expenses). Wife cites an unspecified “Merriam Webster dictionary definition” of “designate,” but we find it unhelpful.

The undisputed trial evidence shows that although Account 3489 was not named or labeled “Household Account,” it was the only account—out of about eight accounts—that was a joint or common account, and from which the couple paid all their living expenses. Combined, the “self-evident” daily living expenses ($1,519,093) and mortgage payments on the couple’s primary residence ($501,567) accounted for $2,020,660 (or almost 30 percent) of the $6,907,033 that flowed through the account. This proportion increases to about 72 percent when expenses related to the Wyoming ranch ($2,946,225) are included as living expenses (for a total of $4,966,885). Including the ranch expenses as living expenses is supported by the first paragraph of section 5.10, which describes living expenses in the context of “achiev[ing] or maintain[ing] the standard of living desired by [the parties],” and Wife’s testimony that she “consider[ed] the ranch to be part of [her] lifestyle.” Thus, the record supports the finding that the parties used Account 3489 primarily for payment of living expenses; that is, as the Household Account.

The family court’s interpretation is also consistent with Husband’s own testimony. When the court asked for his “opinion” of what “is a household account,” Husband responded, “Household account, like I said, buying food, clothing, shelter.” It is undisputed that Account 3489 is the only account that satisfies Husband’s own criteria.

We are unpersuaded by Husband’s assertion that designating the Household Account by conduct instead of an express label deprived him of notice of the significance of adding Wife to Account 3489. Although Husband testified he did not intend that his adding Wife to Account 3489 would result in designating the account as the Household Account under the Agreement, he also testified in response to the court’s direct questioning that he understood the consequences of jointly titling property, that he avoided doing so with certain properties, but that he admittedly did so with Account 3489. The record also shows that the parties understood Husband could grant Wife signing authority on a bank account without also granting her an ownership interest in it. The fact Husband added Wife as an owner (and not a mere signer) of Account 3489 thus supports the finding he understood the ramifications of his actions.

In light of this conflicting extrinsic evidence, the family court’s construction of section 5.10 of the Agreement was reasonable and we find no error.

III. Parol Evidence
IV.
Husband contends the family court erred by refusing to consider parol evidence that he contends would have shown that the Household Account reimbursement-waiver provision of section 5.10 was ambiguous and narrower than the waiver contemplated by Family Code section 2640. We agree the family court erred by not provisionally receiving Husband’s proffered extrinsic evidence, but our independent review of that evidence indicates the error was not prejudicial because the evidence was inadmissible inasmuch as it impermissibly contradicted the Agreement.

A. Background
B.
At trial, Husband sought to introduce preliminary drafts of the Agreement and related correspondence exchanged by the parties’ counsel during negotiations. These exchanges culminated in a letter from Wife’s counsel accepting Husband’s assertion that his “waiver of his [Family Code section] 2640 rights will pertain to the Tombstone property only . . . .”

Wife’s counsel argued the parol evidence was inadmissible because it was unnecessary to elucidate section 5.10’s unambiguous reimbursement waivers, and because section 3 of the Agreement states there is “no prior agreement” between the parties on the topics covered by the Agreement. The family court sustained Wife’s objection, finding it needed to “focus on where there is an ambiguity or an issue associated with the agreement itself.”

C. Relevant Legal Principles
D.
“The parol evidence rule generally prohibits the introduction of any extrinsic evidence, whether oral or written, to vary, alter or add to the terms of an integrated written instrument.” (Alling v. Universal Manufacturing Corp. (1992) 5 Cal.App.4th 1412, 1433; see Code Civ. Proc., § 1856, subd. (a) [“Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to the terms included therein may not be contradicted by evidence of a prior agreement or of a contemporaneous oral agreement.”].) “Extrinsic evidence is admissible, however, to interpret an agreement when a material term is ambiguous.” (Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1126; see Code Civ. Proc., § 1856, subd. (g) [“[t]his section does not exclude other evidence . . . to explain an extrinsic ambiguity or otherwise interpret the terms of the agreement”].)

“The test of whether parol evidence is admissible to construe an ambiguity is not whether the language appears to the court to be unambiguous, but whether the evidence presented is relevant to prove a meaning to which the language is ‘reasonably susceptible.’ ” (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165 (Winet).) “The decision whether to admit parol evidence involves a two-step process. First, the court provisionally receives (without actually admitting) all credible evidence concerning the parties’ intentions to determine ‘ambiguity,’ i.e., whether the language is ‘reasonably susceptible’ to the interpretation urged by a party. If in light of the extrinsic evidence the court decides the language is ‘reasonably susceptible’ to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step—interpreting the contract.” (Ibid.) However, “[e]xtrinsic evidence offered to prove an interpretation to which a document is not reasonably susceptible is inadmissible.” (In re Marriage of Dawley (1976) 17 Cal.3d 342, 353, fn. 7; see Winet, at p. 1167 [parol evidence is inadmissible “to flatly contradict the express terms of the agreement”].)

“Different standards of appellate review may be applicable to each of these two steps, depending upon the context in which an issue arises. The trial court’s ruling on the threshold determination of ‘ambiguity’ (i.e., whether the proffered evidence is relevant to prove a meaning to which the language is reasonably susceptible) is a question of law, not of fact.” (Winet, supra, 4 Cal.App.4th at p. 1165.) “Thus the threshold determination of ambiguity is subject to independent review.” (Ibid.)

E. Analysis
F.
The family court never undertook the first step of the two-step parol evidence process—provisionally receiving the proffered parol evidence to determine whether it revealed an otherwise latent ambiguity in the Agreement. This was error. However, our independent review of the proffered parol evidence shows the error was not prejudicial because the parol evidence does not prove a meaning to which the reimbursement waiver for contributions of separate property into the Household Account is reasonably susceptible.

Section 5.10 of the Agreement includes the following express reimbursement waiver for separate property contributed into the Household Account:

“To the extent either Party contributes the Party’s separate property funds into the Household Account, such contributions shall be deemed to be gifts by the contributing Party to the community and shall not entitle the contributing Party to any separate interest in the Household Account or any reimbursement from the community property.”

Husband argues that because his proffered parol evidence shows that the parties agreed section 5.6 of the Agreement (regarding the Tombstone Property) would be the only provision to include an express waiver of Family Code section 2640 reimbursement rights, then section 5.10’s Household Account reimbursement waiver must somehow be narrower than it appears on its face. But Husband has neither explained how his proffered parol evidence reveals any latent ambiguity in the Household Account reimbursement waiver, nor shown that the provision is reasonably susceptible to a narrower reading. Instead, Husband merely seeks to contradict the unambiguous waiver of reimbursement rights for separate property contributions into the Household Account. The parol evidence rule prohibits such a result. (Winet, supra, 4 Cal.App.4th at p. 1167; In re Marriage of Dawley, supra, 17 Cal.3d at p. 353, fn. 7.)

Although the family court should have provisionally received Husband’s proffered parol evidence to determine whether it revealed an ambiguity in section 5.10’s Household Account reimbursement-waiver provision, our independent review of the parol evidence shows, ultimately, the evidence was properly excluded.

V. Undue Influence
VI.
Husband contends Wife breached the fiduciary duties that ordinarily apply to interspousal financial transactions when she allowed him to add her to Account 3489 without her first reminding him of the legal consequences of his doing so (i.e., that he was waiving his right to reimbursement for any separate property he thereafter contributed into the account). Husband maintains public policy prohibits a waiver of these duties. He therefore challenges the family court’s findings that (1) Husband and Wife could (and did) validly waive via the Agreement their interspousal fiduciary duties as they relate to Account 3489; and (2) Wife rebutted any presumption of undue influence that would have arisen from her obtaining an unfair advantage from being added to Account 3489. We conclude substantial evidence supports the second finding, which disposes of any prejudice that would have resulted from an erroneous finding on the first issue. We therefore address only the family court’s finding that Wife rebutted the presumption of undue influence.

A. Undue Influence Principles
B.
“Spouses have the right to enter into property-related transactions with each other.” (In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 343 (Fossum); see Fam. Code, § 721, subd. (a).) In such transactions, “Family Code section 721, subdivision (b) ‘imposes a duty of the highest good faith and fair dealing on each spouse . . . .’ This duty stems from the ‘general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other,’ prohibiting each spouse from taking ‘any unfair advantage of the other.’ ” (Lintz v. Lintz (2014) 222 Cal.App.4th 1346, 1353 (Lintz); see Fossum, at p. 344.) “Thus, ‘ “[i]f one spouse secures an advantage from the transaction, a statutory presumption arises under [Family Code] section 721 that the advantaged spouse exercised undue influence and the transaction will be set aside.” ‘ ” (Lintz, at p. 1353; see Fossum, at p. 344.)

The statutory presumption of undue influence is rebuttable. (See Fossum, supra, 192 Cal.App.4th at p. 344; Lintz, supra, 222 Cal.App.4th at p. 1353.) ” ‘ “When a presumption of undue influence applies to a transaction, the spouse who was advantaged by the transaction must establish that the disadvantaged spouse’s action ‘was freely and voluntarily made, with a full knowledge of all the facts, and with a complete understanding of the effect of’ the transaction.” [Citation.]’ ” (Fossum, at p. 344; see Lintz, at p. 1353.)

“The question ‘whether the spouse gaining an advantage has overcome the presumption of undue influence is a question for the trier of fact, whose decision will not be reversed on appeal if supported by substantial evidence.’ ” (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 737.)

C. Background
D.
The court’s tentative decision found “[t]here was no evidence that either party fully understood (or had any understanding at all) of the legal effect of their signing [the relationship change application for Account 3489] other than [Wife] would have the authority to sign checks against the funds on deposit in [Account 3489].” Wife’s request for a further statement of decision asked the court to state the factual and legal basis on which the court reached this determination, and the related implied determination that Wife obtained an “unfair advantage.” Wife cited Husband’s trial testimony and argued it supported a finding that “he was fully familiar with the [Agreement] when it was signed and was aware of the consequences of [Wife] becoming a signor on [Account 3489].”

In its ruling on Wife’s request for a further statement of decision, the family court revised its initial findings:

“Was the advantage unfair?

“No. [¶] . . . [¶]

“The Court finds that the transaction ([Wife]’s name being added to Wells Fargo account 3489) was freely and voluntarily made, and with full knowledge of all the facts, and with a complete understanding thereof. (On April 8, 2004 [the date the parties signed the Agreement], both parties understood and were represented by counsel and the [Agreement] is crystal clear re the impact of the placement of separate funds into a joint account.)”

The court’s final statement of decision did not modify these findings. In addition, the court “concluded Family Code Section 721 is not applicable to the circumstances herein” because Family Code section 1612 allows parties to enter into premarital agreements that modify “multitudes of rights and obligations,” some of which might otherwise constitute breaches of fiduciary duties if undertaken during (instead of before) marriage. In support of this conclusion, the court “noted there was no evidence or suggestion of actual fraud on the part of [Wife]”; the parties were “fully and independently advised” by counsel when they negotiated the Agreement; the parties “read and understood the terms, conditions and provisions of the [Agreement]”; and the parties “acknowledged . . . that neither party has executed [the] [A]greement under any form of undue influence or . . . duress.”

E. Analysis
F.
Substantial evidence supports the family court’s factual finding that Wife rebutted the statutory presumption of undue influence. The legal consequence of adding Wife to Account 3489 was clearly specified in section 5.10 of the Agreement. Husband was represented in the Agreement negotiations by a certified family law specialist, whose certification appended to the Agreement states she “explained to [Husband] the legal effect of the [Agreement] and what [his] rights would be in the absence of such Agreement,” and that Husband “acknowledged . . . that [he] understood the effect of said Agreement.” Husband’s notarized and witnessed signature on the Agreement follows his own certification: “I have carefully read and understand all of the provisions in the foregoing Agreement and approve of and agree to all of the terms thereof. I am freely, willingly, and voluntarily consenting to the terms of this Agreement and I am under no duress or undue influence.” (See, e.g., In re Marriage of Lund (2009) 174 Cal.App.4th 40, 56 [“[Husband]’s attestation to his understanding of the agreement served to rebut the presumption that he did not understand the legal import of the agreement.”]; In re Marriage of Kieturakis (2006) 138 Cal.App.4th 56, 90 [“the presumption of undue influence should not attach in this case because the parties acknowledged in the MSA that no undue influence was exercised. . . . While such avowals might themselves be the product of undue influence, we think that they should count for something . . . .”].) Consistent with these certifications, Husband testified in response to the family court’s direct questioning that he read and understood the Agreement, that he avoided putting some property in Wife’s name because he “understood the significance of” doing so, but that he nonetheless added Wife’s name to Account 3489.

Husband argues this is insufficient to rebut the presumption of undue influence because he received ” ‘clearly inadequate consideration coupled with non-disclosure.’ ” However, his consideration argument—that Wife merely signed the Agreement, the value of which “was far exceeded by the millions [Wife] received” and “occurred long before each deposit”—ignores the fact that but for Wife’s signature on the Agreement she would have obtained a one-half community property interest in all of Husband’s income earned during the marriage. And Husband’s nondisclosure argument—that Wife “breached” the Agreement by failing to ” ‘designate[]’ ” Account 3489 as the “Household Account”— ignores the import of the Household Account reimbursement waiver in section 5.10 of the Agreement. Husband testified he read and understood this provision, and his understanding is evidenced by his practice of titling some property solely in his name, and by granting Wife mere signing authority on some accounts, yet knowingly adding Wife as an owner on Account 3489.

DISPOSITION

The family court’s order is affirmed. Wife is entitled to her costs on appeal.

HALLER, J.

WE CONCUR:

HUFFMAN, Acting P. J.

GUERRERO, J.