Filed 9/24/20 Marriage of Fader 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 the Marriage of ESTHER and STEVEN HOWARD FADER. B296972

ESTHER FADER,

Respondent,

v.

STEVEN HOWARD FADER,

Appellant. (Los Angeles County

Super. Ct. No. YD061105)

APPEAL from a judgment of the Superior Court of Los Angeles County, Rolf M. Treu, Judge. Affirmed.

Law Office of Marilyn M. Smith and Marilyn M. Smith; Law Offices of Beatriz A. Pelayo-Garcia and Beatriz A. Pelayo-Garcia, for Appellant.

No appearance by Respondent.

In this dissolution action, Steven Fader (husband) appeals from a judgment dividing his and Esther Fader’s (wife) community property. At issue is the family home. Prior to the parties’ separation, they were faced with the foreclosure of their home and they reached out to wife’s sister (sister) for a loan. Sister agreed to pay off the mortgage in exchange for one-third interest in the house. The parties went to a lawyer who helped them transfer the house into a trust. Husband, wife and sister were equal beneficiaries under the trust.

At trial, husband argued that wife concealed financial information from him and exercised undue influence in order to trick him into the property transfer agreement. He testified he was addicted to Vicodin during that time and argued he lacked the capacity to enter into the agreement. The trial court found him not credible, and concluded the residence had been transmuted to separate property.

Husband appeals, and argues the trial court erred in not setting aside the trust due to wife’s breach of fiduciary duty, her exercise of undue influence over him, and his lack of capacity when he entered into the agreement. He also challenges the court’s order denying him spousal support, attorney fees, and Watts charges. We find no error and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

1. Petition for Dissolution
2.
The parties were married in 1989. During their marriage, husband worked in the clothing business, operating his own company, and wife worked as a homemaker. In the 2000s, they experienced financial problems, and in December 2010, the mortgage on the family residence (Residence) was in default. They appealed to wife’s sister for help, and sister agreed to pay off the existing mortgage. With an attorney’s assistance, the Fader Real Property Trust (Trust) was created to which title of the property was transferred. Husband, wife and sister were each awarded an equal share in the Trust.

A little over a year later, wife petitioned to dissolve the marriage due to irreconcilable differences. The case trailed on for several years and, in February 2017, a status judgment was entered, dissolving the marriage. Trial was eventually set for 2018 on the parties’ dispute over the disposition of the family home.

In husband’s trial brief, he requested that the court set aside the Trust and award him 50 percent community property interest in the Residence. He argued that wife had tricked him into agreeing to transfer the Residence into the Trust, obtaining his signature “through undue influence,” and that he had lacked the capacity to sign the document due to his Vicodin addiction. Wife argued that husband was not “incapacitated or unable to make valid decisions on his own” when he signed the Trust documents, and there was no undue influence.

3. Trial
4.
Trial started in August 2018. The parties’ children testified about their parents’ financial woes prior to their separation. Their daughter, who was 26 years old, testified that in 2010 father would gamble all day, every day. The parties’ 24-year-old son testified that in 2010, his parents argued daily about how husband had been “gambling away” their money for years.

Wife testified that when she learned husband had failed to pay their mortgage in December 2010, she and husband went to the bank and were told the house was going to be sold within the next few days at a foreclosure sale. The bank required $51,000 to cure the foreclosure, and $200,000 to pay off the mortgage completely.

Husband asked sister if she would loan them $51,000, the approximate amount of the default. Sister refused, saying they would never be able to pay her back. Husband then offered sister one-third of the Residence, and sister agreed to pay off the entire mortgage. Husband, wife and sister agreed that each of them would own one-third of the home.

According to wife’s testimony, sister, who lived in Israel, had already wired $160,000 to an account in son’s name with the intent to invest it in America. Husband had advised sister to place the money in son’s account for tax purposes. When husband and wife discussed the impending foreclosure, husband brought up the $160,000 sister had already transferred and sister said she would send them the balance of the $200,000—the amount necessary to pay off the loan. Husband and wife then met with an attorney, Thomas Corcovelos, on three separate occasions to draw up the Trust documents and property transfer agreement.

Corcovelos testified that he met with husband and wife, and went over the drafted documents paragraph by paragraph with them. He discussed how the transmutation from community to separate property would change their ownership interest in the house. He further told them he could not advise them of the value of the home or their community interest, and that they needed to consult with another professional on value. Corcovelos took part in a conference call with husband, wife and sister, during which sister said she would pay off the foreclosure amount on the condition that the property be placed in a trust in which sister would receive a one-third interest in the property and wife would be named as trustee.

Husband’s testimony contrasted starkly with that of wife and Corcovelos. Husband testified that he had “no idea” the house was going into a trust or that sister was going to be a one-third owner of the house. He only understood that sister had agreed to loan them the money to cover the mortgage and that she wanted them “to sign papers” in exchange. According to husband, wife had threatened to throw him out of the house if he did not sign the documents. He further claimed he did not know that sister had transferred $160,000 into a bank account in son’s name. Husband testified that he was addicted to Vicodin in 2010 and could not “think clearly” while on the medication.

5. The Court’s Ruling
6.
The court found husband not credible. Husband’s “lack of credibility completely undercuts any claim that he has that he was unduly influenced or drug-addled to the extent he could not understand the transmutation process. The [c]ourt finds he was a knowing, intelligent and active partner in the transmutation, and that the transmutation benefitted him by retention of an 1/3 interest in the trust as opposed to having him lose his entire interest in the residence if the foreclosure had gone forward to sale.”

The court found no presumption of undue influence under Family Code section 721, subdivision (b) : “the evidence is uncontradicted that the residence was in foreclosure and that both parties were eager to save it from involuntary foreclosure sale. [¶] . . . [¶] Even were the [c]ourt to find a presumption of undue influence, such presumption would be negated by the full and complete knowledge of the allegedly disadvantaged party regarding the effects of the transmutation.”

The trial court concluded that each party had a one-third interest in the Trust, and there was no community interest to divide. Respondent filed objections to the court’s proposed statement of decision, which the court overruled. Judgment was entered in accordance with the court’s statement of decision, and husband timely appealed.

DISCUSSION

1. Wife’s Alleged Breaches of Fiduciary Duty
2.
Much of husband’s claim of trial court error rides on wife’s alleged breaches of fiduciary duty. He argues that wife breached her fiduciary duty to him by failing to inform him of the existence of the bank account containing $160,000. He argues that “the undisputed facts established that [wife] failed to disclose to [husband] a bank account containing $160,000 . . . .”

Husband’s characterization of the record is inaccurate. The evidence was not “undisputed” that wife “failed to disclose” this bank account to husband. In fact, wife testified that husband “brought [] up” the $160,000 to wife as a means of paying off their mortgage. This fact was very much disputed by the parties: husband testified that he did not know about the existence of these funds; wife testified he was always in the know.

The trial court found husband not credible. In our review, we must defer to the trial court’s findings on credibility and read the record in the light most favorable to the judgment. (See Falahati v. Kondo (2005) 127 Cal.App.4th 823, 828 [“It is the province of the trial court to determine the credibility of the declarants and to weigh the evidence”]; People v. Prince (2007) 40 Cal.4th 1179, 1251.) That means that, for our purposes, substantial evidence supports the trial court finding that wife did not fail to disclose the existence of the $160,000 in son’s bank account to husband.

Husband also argues that wife breached her fiduciary duty to him when she “retained an attorney to draft documents to effectuate the property transfer as determined by herself and her sister,” and “concealed the true effect of the Transmutation Documents and Trust Documents from [husband].” Again, husband’s argument disregards the court’s credibility findings. Not only did the court find that husband “completely lacks credibility in his claim that he did not know . . . the effects of the transmutation,” but the court further found that “[c]redible testimony was adduced that he was active in the transmutation process asking questions . . . . [¶] The [c]ourt finds he was a knowing, intelligent and active partner in the transmutation . . . .” On appeal, husband does not argue that insufficient evidence supports those findings. Instead, he simply ignores them and asks us, in essence, to review the testimony de novo. This we cannot do.

3. Undue Influence
4.
Husband contends the trial court erred in concluding that the transfer of the Residence into the Trust was not the result of undue influence. He argues the undisputed evidence established that the transfer gave wife an unfair advantage over him. Husband’s characterization of the record is again inaccurate and he has not carried his burden of showing error.

A presumption of undue influence arises when a transaction between spouses gives one spouse an unfair advantage over the other. (In re Marriage of Bonds (2000) 24 Cal.4th 1, 27.) The spouse who was advantaged in an interspousal transaction has the burden of proving that the transaction was not the result of undue influence. (In re Marriage of Delaney (2003) 111 Cal.App.4th 991, 996.) We review the trial court’s factual findings that the presumption has been triggered or rebutted for substantial evidence. (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 737.)

Here, the trial court found no unfair advantage was granted to wife because each party “has a 1/3 interest in the trust which owns the property. Neither party may dispose of the trust assets unilaterally. Each side is protected in the event of sale to the extent of his or her 1/3 interest. [¶] The fact that sister may at her election, assign her share to [wife] does not require her to do so.”

Husband’s argument is premised on the claim that the transmutation of the Residence to separate property gave wife an unfair advantage because it “resulted in [him] losing any ownership interest in the property with no consideration paid.” This argument utterly ignores the court’s factual findings that he received a one-third ownership interest in the Residence. It also ignores the reality of the pending foreclosure which, if it proceeded to sale, would mean husband would have no interest in the Residence. Husband’s burden on appeal is to demonstrate that the court’s challenged finding of fact is unsupported by substantial evidence, and he has not met this burden. (See Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881 [it is appellant’s burden to demonstrate that no substantial evidence supports the judgment].)

Husband also argues that wife gained an unfair advantage because she “would ultimately control [sister’s interest], giving her a two-thirds’ interest in the trust.” In support of this argument, he cites to arguments made in his trial briefs and his own testimony at trial. Husband’s briefs do not constitute evidence, and his testimony was considered not credible. Further, the record on appeal has not been augmented with the exhibits at trial which included the Trust document. As appellant, husband bears the burden of producing an adequate record for our review. (See Mountain Lion Coalition v. Fish & Game Com. (1989) 214 Cal.App.3d 1043, 1051, fn. 9 [“the appellant has the burden of affirmatively demonstrating error by providing an adequate record”].) Without the trust instrument and based on the limited record, we may not re-interpret the Trust in a manner different from the trial court. Lastly, even if the trust document attached to husband’s trial brief was properly before us, husband only cites to the paragraph that provides that sister, husband, and wife all “have a 1/3rd interest” in the property. Husband has not shown that the trial court erred in its reading of the Trust as granting husband, wife and sister each one-third interest.

Husband also does not address the trial court’s conclusion that even if the presumption of undue influence applied, it was “negated by the full and complete knowledge of the allegedly disadvantaged party regarding the effects of the transmutation.” We find no error.

5. Spousal Support and Attorney Fees
6.
Husband did not ask for spousal support or attorney fees in his responsive pleadings, but argued for both at trial. The court concluded that it did not have jurisdiction to award this relief because of husband’s failure to request such in his response to the petition. Husband now argues this was error.

In general, the issues at trial are those framed by the pleadings. (See Marvin v. Marvin (1981) 122 Cal.App.3d 871, 875.) A trial court has wide discretion to permit parties to amend their pleadings in furtherance of justice or to conform to proof. (See Code Civ. Proc., §§ 469, 473, 576.) A trial court also has discretion to deny amendments to pleadings if such amendments would not be in furtherance of justice. (See In re Marriage of Liss (1992) 10 Cal.App.4th 1426, 1429.)

Here, husband did not seek to amend his pleadings to include a request for spousal support or attorney fees. Counsel at oral argument acknowledged husband did not request leave to amend. Although the court would have had the discretion to grant a request to informally amend the petition during the trial, it was not required to do so. (Cf. In re Marriage of Denny (1981) 115 Cal.App.3d 543, 556–557 [where respondent did not request an award of attorney fees in his response, his request for fees in the trial brief could be considered an informal amendment of the pleadings].) Because husband did not seek leave to amend the petition, the trial court was not afforded the opportunity to exercise its discretion to grant or deny the request, and there is nothing for us to review. The trial court correctly concluded that on the state of the pleadings it had no jurisdiction to award either attorney fees or spousal support.

DISPOSITION

The judgment is affirmed.

RUBIN, P. J.

WE CONCUR:

BAKER, J.

KIM, J.