Filed 2/24/20 Goss v. Corcoran CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

BRUCE GOSS,

Cross-Complainant and

Respondent,

v.

JACQUELINE CORCORAN,

Cross-Defendant and

Appellant. B281718

(Los Angeles County

Super. Ct. No. GC050128)

APPEAL from a judgment of the Superior Court of Los Angeles County, William D. Stewart, Judge. Reversed.

Law Office of Frederick E. Chol and Frederick E. Chol, for Cross-Defendant and Appellant.

Blackburn & Associates and Alexander C. Blackburn, for Cross-Complainant and Respondent.

__________________________

In a partition action, the trial court found the parties held title to real property in joint tenancy, but, without evidentiary support, found one owner to be entitled to recover for his work increasing the value of the real property. Because the trial court erred in applying the law, and made factual findings contrary to the testimony of all witnesses, we reverse the judgment.

FACTUAL AND PROCEDURAL SUMMARY

In September 2012, Jacqueline Corcoran filed a complaint against her former co-habitant Bruce Goss. The complaint, which is not contained in the record before this Court, was dismissed before trial. Goss filed a cross-complaint for partition of real property which the parties owned and in which they resided together between 1984 and 2002; the first amended cross-complaint, filed in May 2014, is the operative pleading in this appeal. Goss alleged that he and Corcoran took title through a quitclaim deed executed in June 1984, as joint tenants, and that Corcoran took possession of that deed at that time but did not record it until 2012.

After Corcoran filed an answer to the cross-complaint, the parties conducted discovery. In response to requests for admission, Goss admitted that the parties held the property as joint tenants with the right of survivorship, and that there was no agreement that Corcoran would reimburse Goss for any monies he spent on the property, including any improvements.

The case was tried to the court on November 30 and December 1, 2015. Goss, Corcoran, and Montgomery, the grantor in 1984, were the sole witnesses.

Goss Testimony

As relevant to this appeal, Goss testified that Montgomery, on behalf of Goss and Corcoran, purchased the real property, encumbering it with loans, in 1984; the parties agreed that Goss would make the payments on the loans. He testified that the down-payment came from several sources: Corcoran’s mother; Goss’s father and stepmother; an unidentified friend; and Goss himself. Immediately after Montgomery’s purchase, he quitclaimed the property to Goss and Corcoran; Corcoran took possession of the deed the day it was signed.

In taking title, Goss felt that the right of survivorship was “very important.” His intent, which all agreed to, was that he and Corcoran would be equal owners of the property, with the right of survivorship. He and Corcoran lived together on the property until 2002, when she moved out.

Goss testified that he made all of the payments on the loans, along with all insurance, taxes and utilities on the property. He also testified to a series of improvements he constructed on the property during the time the parties lived there together, not all of which had permits, setting out the costs incurred in making those improvements. He introduced pictures of the improvements, and described them to the court.

According to Goss, he never discussed with Corcoran how the proceeds would be divided if the house were to be sold, never told her he wished to be reimbursed for any of the payments he made, and never had any agreement with her.

Corcoran Testimony

Corcoran testified that, when she and Goss wished to buy property, her mother assisted them with the down payment and advised them on payment of the loans. Her mother insisted that title be taken as joint tenants. She received the deed when Montgomery executed it, but then gave it to her mother to place in a safe deposit box; when her mother became ill in 2000, Corcoran retrieved the deed. She had a copy of the deed at all times.

She stated that she had assisted with making some of the improvements on the property during the period, ending in 2002, that she lived with Goss at the house.

Montgomery Testimony

Montgomery described himself as the “front man” for the purchase; he received no money for his role. He was unconcerned about retaining liability for the debt, and trusted Goss to make the payments; because the property was cheap, “the worst thing that could have happened to [him] at that time was that it would’ve hit [his] credit.”

He signed the quit claim deed, and gave it to the real estate agent for delivery. His understanding was that the agent took the deed first to Corcoran and Goss, after which it went to Corcoran’s mother.

The Court’s Ruling

After the close of evidence, and arguments by counsel, the court indicated its tentative views on some of the issues. The court first indicated that it believed that Montgomery had not intended to transfer title until the loans were paid in 2008, although the court later stated that the date could have been 2002 or 2008: “it doesn’t make any difference.” The court further concluded the title was held in joint tenancy, with the right of survivorship. Turning to Goss’s claims to receive the value of his payments and improvements, the court concluded that the issue was whether the improvements added to the value of the property, conceding that, while there was evidence of the costs of the improvement, there was no evidence of the value added. Because the house was a “teardown,” Goss argued for, and the court considered, only the value of improvements to the land.

The court issued its ruling in a minute order. The court found that Corcoran and Goss were joint tenants; that division in kind was not available, and a sale of the property was required; that reimbursement is not permitted in the absence of an agreement, which the court did not find to exist; and that Goss had substantially increased the value of the property, entitling him to “recognition through distribution of proceeds.” The court stated no legal basis for this last conclusion.

With respect to the increase in value, the court acknowledged that there was neither direct nor expert evidence of the value. The court nonetheless concluded, based on the appearance of the property, that it could determine the value added; it described one of the structures as “worthy of a cathedral or Windsor Castle” on an aesthetic basis. Based on the court’s personal assessment of added value, and the costs of the work, the court ordered that, following sale of the property, and payments of liens and expenses of sale, Goss was to be credited $52,500, and the remainder of the proceeds divided equally. In accordance with Corcoran’s request for a statement of decision, the court ordered counsel for Goss to prepare a proposed statement.

The Statement of Decision

Corcoran filed objections to the court’s tentative decision, and requested additional findings. Goss filed a proposed statement of decision; Corcoran filed objections. The court, with certain interlineations, signed the proposed statement and entered judgment.

In the statement of decision, the trial court found, as relevant to this appeal, that the sale was concluded through Montgomery, the property deeded almost immediately to Goss and Corcoran as joint tenants, and the deed “immediately delivered” to Corcoran’s mother. Goss made all property-related payments and paid off the loans in 2012, and made improvements to the property. According to the court, the deed was delivered to Corcoran after the loans were paid.

Consistent with the court’s minute order, the trial court determined that the title was held in joint tenancy; that reimbursement was not allowed in a joint tenancy in the absence of an agreement; and that no agreement existed. The court found that Goss had made improvements that substantially increased the value of the property, for which he was entitled to recognition on distribution of sales proceeds on two grounds: Goss was a good faith improver (Code Civ. Proc., § 871.1 et seq.; and Code Civ. Proc., § 873.220). These legal grounds had not been stated in the court’s minute order.

The factual basis for the conclusion that Goss was a good faith improver was the court’s finding that Montgomery did not intend to deliver title to Corcoran and Goss until they had paid the loan, concluding any other course of action would be “absurd” and that “Montgomery did not intend to place himself in such a vulnerable position.” The court further concluded that Corcoran’s mother held the deed in escrow until the loan was paid. Because Goss believed he was the property owner at the time the improvements were made, but not yet a joint tenant, he accrued equitable rights prior to the inception of the joint tenancy, and the parties took title subject to his equitable lien.

As an independent ground, the statement of decision concluded that section 873.220 has been interpreted by the courts to allow a compensatory adjustment on partition, citing Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035-1036 and Mercola v. Chester (1950) 97 Cal.App.2d 140, 143.

The court attached no value to the improvements to the structure, but found the other improvements added value in the total amount of $52,200, based on the evidence of cost basis, the appearance of the property, and the court’s evaluation of the aesthetic value of the improvements.

The court ordered partition by sale.

Corcoran appeals.

DISCUSSION

I. The Nature of Joint Tenancy
II.
Joint tenancy is defined by Civil Code section 683, which provides, in part: “A joint interest is one owned by two or more persons in equal shares, by a title created by a single will or transfer, when expressly declared in the will or transfer to be a joint tenancy. . . .” In joint tenancy, there is one estate, in which the title of each extends to the entire holding. (Tenhet v. Boswell (1976) 18 Cal.3d 150, 155.) The interests of joint tenants in property are equal, as to possession and use, in the absence of an agreement to share in some other manner. (4 Miller & Starr, Cal. Real Estate (4th ed. 2019) §§ 25-26, pp. 1168-1170.)

In contrast, in a tenancy in common, the interests of the co-owners need not be equal, but may be held in proportion to their contributions to the property. As a result, reimbursements of contributions to the purchase or maintenance of the property are available in tenancies in common. (Willmon v. Koyer (1914) 168 Cal. 369, 372.) No case has held that such reimbursements are available where there is a joint tenancy; as discussed below, the law is to the contrary.

III. The Court Erred In Awarding Goss Sums For The Improvements
IV.
A. Goss Was Not A Good Faith Improver
B.
The first ground on which the court relied to award Goss a distribution related to the improvements to the property was the conclusion that he was a good faith improver of the property. That ground has neither a factual nor a legal basis in this case.

First, as a matter of law, the doctrine of good faith improver requires that a person make improvements on the property of another in the erroneous belief that he or she is the owner of the property. (§ 871.1 subd. (a).) To assert a claim on this basis, the statute requires the party seeking relief to allege the factual basis in a complaint or cross-complaint and then establish the facts at trial. Goss’s cross-complaint did not allege that Montgomery owned the property at the time Goss made the improvements at issue; instead he alleged that he and Corcoran owned the property as joint tenants from 1984 forward. Goss did not attempt at trial to prove that Montgomery owned the property at any time after executing the quit-claim deed.

The facts testified to at trial support the pleadings, but not the findings. On review, we must determine whether there was substantial evidence supporting the factual findings on which the court relied for its ruling. (Obregon v. Superior Court (1998) 67 Cal.App.4th 424, 430.)

Goss and Corcoran testified consistently that they received the deed the day it was signed, and that it was thereafter held by Corcoran or her mother. Montgomery, the grantor, testified that he gave up possession of the deed immediately, with the understanding that it would be delivered to Goss and Corcoran. Montgomery further explained that he was unconcerned that he remained on the loans. No party testified that Montgomery expressed the intent that title would not pass until the loans were paid; no party testified that the reason Corcoran’s mother held the deed until 2000 was to act as escrow. The court’s conclusion that there was an escrow until the loans were paid was not only unsupported by the testimony, but also undermined by the undisputed testimony that the loans were not paid until 2012, while Corcoran had physical possession of the deed in 1984, and again from 2000 forward.

Title passed on delivery of the deed, and was not affected by the delay in recording it. (Mecchi v. Picchi (1966) 245 Cal.App.2d 470, 483-485 [delivery of deed shows grantor surrendered all interest, regardless of fact that deed physically held for safekeeping by another and not recorded for a period of time].) The evidence introduced at trial shows delivery in 1984; as a result, the record does not support the finding that Goss was a good faith improver, as he, along with Corcoran, and not Montgomery, was the owner of the property when the improvements were made.

C. Section 873.220 Does Not Support The Award
D.
The alternate ground for the award also fails as a matter of law. The court found that there was a true joint tenancy, and that the parties never agreed to any form of reimbursement. As Goss did not file a cross-appeal, he has not challenged these rulings.

The court correctly concluded that, in a true joint tenancy, neither party has a right for reimbursement for expenses paid, or improvements made to the property, in the absence of an agreement between the parties. (Milian v. De Leon (1986) 181 Cal.App.3d 1185 (Milian); Donlon v. Donlon (1957) 155 Cal.App.2d 362 (Donlon).)

In Milian, the parties, like the parties here, lived together in a long-term relationship, but never married. Also, like the parties here, they purchased real property and took title as joint tenants. (181 Cal.App.3d at p. 1189.) When a dispute arose, each sought reimbursement for amounts they paid toward the down payment and various improvements to the property; the trial court declined to order the adjustments. On appeal, the court affirmed, finding while tenants in common may seek an accounting and reimbursement for unequal sums paid in the acquisition, maintenance, and improvement of the property, joint tenants may not unless they have made an agreement to the contrary. (Id. at pp. 1194-1195.) “Though the discovery gives us some discomfort in terms of legal symmetry, it appears to us that once the court in a partition action has determined that a true joint tenancy exists, it may not order reimbursement or contribution on account of differences in the amounts the parties have paid toward the initial acquisition of the property. Of course, if one joint tenant has advanced funds on behalf of the other and there is an agreement between them for reimbursement in the event of sale of the property, that agreement can be enforced by the court. [Citation.] However, by definition joint tenancy ownership means equal ownership (see Civ. Code, § 683), and in the absence of an agreement for reimbursement we are unaware of any authority which authorizes reimbursement on account of unequal contributions to the down payment.” (Milian, supra, 181 Cal.App.3d at pp. 1194-1195.)

In Donlon, the parties similarly held property in joint tenancy, and one of the parties sought reimbursement for contributions to the down payment, and for expenses paid and improvements made. The court held that there was no reimbursement in a joint tenancy situation, and denied the relief.

In this case, the court relied on section 873.220 to avoid the requirements of those cases. Section 873.220 states: “As far as practical, and to the extent it can be done without material injury to the rights of the other parties, the property shall be so divided as to allot to a party any portion that embraces improvements made by that party or that party’s predecessor in interest. In such division and allotment, the value of such improvements shall be excluded.”

Adopted in 1976, prior to the Milian decision, that statute has been applied to permit trial courts to make equitable adjustments between titleholders in tenancy in common cases; the court did not cite, nor does Goss here, a case in which the statute was held to apply where there is a joint tenancy.

i. The Statute Cannot Apply to Joint Tenants
ii.
On the face of the statute, allocation of the value of improvements cannot be made in a joint tenancy, as to do so would materially injure the rights of the co-tenant to an undivided and equal interest in the property:

“[W]hile as a rule the act or contract by one joint tenant respecting the joint property without the authority or consent of his cotenant cannot bind or prejudicially affect the latter (33 Cor. Jur., Joint Tenancy, sec. 22, p. 913), where the act of one joint tenant is beneficial to his cotenant, such act will be regarded as the act of all in so far as sharing in the benefit thereof is concerned. (Crary v. Campbell, 24 Cal. 634).” (Simpson v. Bergmann (1932) 125 Cal.App. 1, 6.)

iii. No Case or Statute Supports The Decision Here
iv.
The statement of decision in this matter relied on Wallace, supra, 220 Cal.App.3d at page 1035, and Mercola, supra, 97 Cal.App.2d at page 143. In Wallace, the parties were tenants in common, and, the court held that, on an equitable basis, one co-tenant could recover compensation for improvements made in excess of the co-tenant’s fractional share of the property. In Mercola, the co-tenants did not hold title, but were tenants under a long-term lease. Neither case addressed the situation where the parties were joint tenants, and neither is authority for the proposition that equitable adjustments can be made in joint tenancy.

Respondent relies on In re Marriage of Leversee (1984) 156 Cal.App.3d 891, 897, a case which preceded Milian. In that case, the court held that, in a family law proceeding, the court has no jurisdiction to divide joint tenancy property acquired before marriage and not agreed to be held as community property. (Leversee, supra, 156 Cal.App.3d at p. 894.) The language on which respondent relies is, accordingly, dicta, dicta which is expressly contrary to the later ruling in Milian.

Respondent also relies on Section 872.140, which provides: “The court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity.” That provision, like section 873.220, was adopted prior to the decision in Milian, and has not been amended. Moreover, as joint tenants hold no fractional shares of the property, in contrast to tenants in common, there is no basis to determine that an expenditure is in excess of the owner’s share of the property, as would be required to apply the statute.

In the absence of authority to the contrary, we believe Milian accurately states the law of joint tenancy and respects the important differences between joint tenancy and tenancy in common, differences the law has respected for many years.

E. The Determination of Value Is Not Supported By Substantial Evidence
F.
Even if the trial court had legal authority to make an adjustment for the value added by the improvements, there is no evidence in the record on which it could rely for the award made. The trial court made clear that the determination of value added by the improvements was based on the court’s own evaluation, and not on any testimony from an owner or an expert witness. Respondent concedes, and the record reflects, that the only evidence the court had was evidence of the costs of the improvement, not of the value they added to the property.

Evidence Code section 813 governs the admission of evidence of value, and provides:

“(a) The value of property may be shown only by the opinions of any of the following:

(1) Witnesses qualified to express such opinions.

(2) The owner or the spouse of the owner of the property or property interest being valued.

(3) An officer, regular employee, or partner designated by a corporation, partnership, or unincorporated association that is the owner of the property or property interest being valued, if the designee is knowledgeable as to the value of the property or property interest.”

Because Goss presented no witness qualified to testify to the value added to the property by the improvements, there is no evidence on which the court could base its finding. Without substantial evidence, the factual finding has no basis, and cannot stand; “no reasonable interpretation of the record” supports the value attributed by the court. (San Diego Metropolitan Transit Development Bd. v. Cushman (1997) 53 Cal.App.4th 918, 931.)

V. On Remand The Sale Must Be Conducted In Accordance With The Law
VI.
Neither party disputes the trial court’s determination that sale of the property was appropriate in this case. Appellant, however, challenges the court’s decision to allow Goss to purchase the property at an appraised price.

The judgment ordered the property partitioned by sale, and sold at fair market value, with each party given 60 days to exercise an option in writing to purchase. If either party exercised the option, the referee appointed by the court was to choose an appraiser to determine value; if neither party exercised the option, the property was to be sold on the open market at fair market value in accordance with sections 873.600-873.690.

Corcoran correctly argues that this procedure does not comply with the statutory requirements. In Cummings v. Dessel (2017) 13 Cal.App.5th 589 (Cummings), the trial court ordered partition, and permitted the parties, who held title as tenants in common, to bid against each other to purchase the property, with a minimum bid set; if this did not result in transfer of title, the court ordered the property listed and sold. (Id. at p. 596.)

On appeal, the court listed the three means of partition: physical division of the property; sale; and partition by appraisal. The court found that the trial court’s procedure, in effect, consisted of partition by appraisal in the first instance, and failing that, partition by sale. (Cummings, supra, 13 Cal.App.5th at p. 598.) Describing partition by appraisal as a means by which “one or more parties may acquire the interests of other co-owners in a piece of property at the appraised value of those interests” pursuant to section 873.910, the court found that the statute requires agreement by the parties to pursue this option. (§ 873.920.) Because there was no agreement between the parties, the court found the trial court had erred as a matter of law. (Id. at pp. 598-599.)

Examining the second alternative, the reviewing court again found error. The trial court had failed to comply with the requirements set out in the statute, ensuring public notice.

In this case, as in Cummings, the first alternative provided in the judgment amounts to partition by appraisal. As in Cummings, the parties did not agree to that procedure, and the writing required by the statute was not filed with the trial court. As in Cummings, the trial court erred as a matter of law in permitting that method of partition.

Unlike Cummings, however, the second alternative provided in the judgment, paragraphs 9-12, does comply with the statute. (§ 873.600-873.690.) Accordingly, on remand, the court shall order partition consistent with that portion of the judgment, and order the proceeds applied, consistent with this opinion, to pay the expenses of the sale and other costs of partition, and to divide the remaining amounts between Goss and Corcoran.

DISPOSITION

The judgment is reversed and the matter remanded to the trial court to order public sale, in accordance with statutory requirements, with equal distributions of proceeds after the payment of expenses to Goss and Corcoran. Corcoran is to recover her costs on appeal.

ZELON, J.

We concur:

PERLUSS, P. J. SEGAL, J.