Marriage of Chapman

Filed 9/13/06 Marriage of Chapman CA4/1

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Robert P. Dahlquist, Judge. Affirmed. Motion for sanctions denied.

Vincenzo Marsala (Vincenzo)^[1] appeals from a judgment after a voluntary reference to a special master. (Code Civ. Proc., § 638.) Vincenzo challenges the sufficiency of the evidence to support the special master's factual determinations. We determine Vincenzo's contentions are without merit, and affirm the judgment. However, we deny respondent Michael Chapman's separate sanctions motion for Vincenzo's filing a frivolous appeal. (See In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.)

FACTUAL AND PROCEDURAL SUMMARY

Relevant Background Facts

Vincenzo's daughter, Belina, was married to Lerald Chapman. In October 2004, Lerald and Belina filed for a dissolution of the marriage (the Dissolution action). In the action, the parties disputed ownership of several parcels of property, including property in Valley Center, which was also the subject of an ownership claim by Lerald's brother, Michael Chapman.

Four months later, Vincenzo filed a civil complaint against the Chapman brothers (Lerald and Michael) and Michael's girlfriend (Rosalba). The complaint sought to quiet title to the Valley Center property in Vincenzo's name, and sought a declaration that Michael had no ownership interest in the property. Vincenzo also alleged several contract and tort claims, including that Rosalba breached her notary duty by notarizing Vincenzo's signature on a grant deed. This action will be referred to as the Vincenzo civil action.

Because several claims in the Dissolution action and the Vincenzo civil action were overlapping, the parties stipulated to consolidate these actions and refer the issues pertaining to the Valley Center property to a special master. The written stipulation read in relevant part:

"The parties agree that MARC PETER KAPLAN shall be appointed as Referee . . . ."

"The underlying dispute in the Civil case concerns allegations regarding one piece of real property and/or actions taken regarding that piece of property, and the outcome of that dispute will have an effect on the outcome of the family law case."

"The parties specifically agree that the Referee shall be authorized to make binding decisions on all issues agreed to be submitted to the Referee. The Parties understand that decisions rendered by the Referee shall be as if a Judge of the Court made the same decision. Pursuant to CCP 6[4]4, upon submission of the parties, final judgment consistent with the findings of the Referee shall be entered by the clerk."

[¶] . . . [¶]

"The parties stipulate and agree that [the Vincenzo civil action], having been consolidated with [the Dissolution action], is hereby removed from the Civil active list. The [Vincenzo civil action] will be resolved within the Family Court matter, and once it is resolved the Civil division will be advised of the resolution."

This stipulation was signed by Michael, Belina, Lerald, Vincenzo, and Rosalba, and the attorneys for Michael, Belina, Lerald, and Vincenzo. The stipulation was also signed and expressly approved by Superior Court Judge Robert Dahlquist, who was presiding over the Dissolution action, and Superior Court Judge Lisa Guy-Schall, who was presiding over the Vincenzo civil action.

Special Master's Findings

After conducting a series of hearings, the Special Master filed a statement of decision, finding Vincenzo's claims in his civil action to be without merit, including Vincenzo's claim that he was the legal owner of the Valley Center property. We summarize the relevant factual findings below.

Vincenzo purchased the Valley Center property in 1993 for $75,000 from the Wanketts, with $15,000 down and a secured note payable to the Wanketts for $60,000. Several years later, Vincenzo failed to pay his obligation on the Wankett note and to pay the property taxes. Vincenzo filed for bankruptcy, which stayed the Wanketts' foreclosure action.

In about 2000, Vincenzo agreed to sell a one-half interest in the Valley Center property to his daughter Belina and her husband Lerald. Lerald and Belina agreed to pay one-half of the monthly mortgage payments. After Belina and Lerald made these and other payments for two years, Vincenzo could no longer afford to make his share of the payments. The parties (Vincenzo and Belina/Lerald) thereafter informally agreed that Lerald and Belina would become full owners of the property and take over the obligation on the Wankett note.

In November 2001, Lerald and Belina began making full payments on the Wankett note. However, by June 2003, the couple was not in a position to continue making the payments or to clear the unpaid property taxes before the scheduled tax sale. Additionally, the bankruptcy stay had been removed, and the Wanketts were threatening to commence actions to collect the unpaid payments and seek reimbursement of legal fees. In early 2004, the Wanketts claimed they were owed $10,000 in unpaid attorney fees, $10,000 in unpaid payments, and $57,000 in remaining principal.

In an effort to "save" the property, Lerald approached his brother Michael and asked for financial assistance, and the parties eventually reached an agreement. In this agreement, Belina and Lerald agreed to transfer ownership of the property to Michael. In exchange, Michael agreed to (1) pay $95,000 for the property (found to reflect approximate fair market value); (2) pay off the underlying mortgage debt to the Wanketts and obtain new financing; and (3) provide Belina and Lerald a 25 percent interest in the property.

The property, however, was still in Vincenzo's name because he had never formally transferred it to Lerald and Belina. Thus, before the sale to Michael could finalize, Vincenzo was required to execute a grant deed and other transfer documents. Vincenzo was in Italy at the time. Through telephone calls and faxes, the parties informed Vincenzo of the nature of the conveyance between Lerald/Belina and Michael, and of the need for Vincenzo to sign a grant deed to transfer the property and prevent the foreclosure action. In response, Vincenzo signed a grant deed transferring the property to Michael. Vincenzo then faxed the deed to his daughter Belina. Belina brought the document to Michael's girlfriend, Rosalba, who is a notary. Belina and/or Michael asked Rosalba to notarize Vincenzo's signature, even though Vincenzo was not in California. Rosalba recognized the signature and agreed to notarize the document to help the family.

Escrow closed on May 20, 2004. The Wankett note was paid from the funds placed into escrow by Michael, and Michael sent Vincenzo approximately $11,000, representing the net proceeds from the sale. These funds were thereafter spent by Vincenzo, Lerald, and/or Belina for their personal benefit.

At the special master hearing, Vincenzo acknowledged he signed the grant deed, but testified he did not intend to transfer title to the property and did not want the deed recorded until he returned from Italy. The Special Master expressly found these claims not credible. In explaining this factual conclusion, the Special Master stated, in part: "When you consider the acknowledged actions taken by Vincenzo, the actions taken by Michael to save the property from imminent loss to the mortgage creditor, the written documents and deed, the only conclusion you can reach is that there was a valid transaction. Clearly, Vincenzo, Lerald and Belina would have lost the property. Vincenzo's English appears to be sufficient . . . . He ran his own business, here, in California . . . . He worked for Sears in Arizona and now works, I believe in Imperial county for a Corporation. I don't believe he has limitations to what he understood. He certainly acknowledged he knew what he was doing, and he acknowledged what he did, directly, in his own words. [¶] If the combined family of Marsalas and Chapmans hadn't fallen apart, we wouldn't be here today. But it did, and as a result, we are here today. I have no choice, but given the overwhelming facts indicating knowledge and agreement to transfer, I must uphold the sale." (Fn. omitted.)

The Special Master also rejected Belina's testimony that there was no intent to transfer an ownership interest in the property to Michael, and instead the transfer was only for Michael to provide his "credit" so the couple could obtain loans on the property. The Special Master found this testimony was inconsistent with numerous undisputed facts. The Special Master also rejected claims by Vincenzo and Belina that the transfer (or the earlier transfer to Belina/Chapman) was conditioned on Vincenzo being entitled to live on the Valley Center property for the rest of his life.

With respect to Vincenzo's claim against Rosalba for improperly notarizing the grant deed, the Special Master found that Vincenzo could not recover on this claim because Rosalba's alleged breach of her notary duties caused Vincenzo no damages. The Special Master explained: "there is no dispute that Vincenzo signed the deed. He acknowledges it. . . . [W]ithout the defective notarization[,] [t]he deed still would be a deed transferring the property. . . . Therefore, how did [Rosalba] cause a damage to Vincenzo from merely authenticating Vincenzo's signature on a document he agrees he signed? . . . The document was always valid and undisputed. [¶] . . . [¶] . . . [Rosalba] is not liable for damages as a result of notarizing a valid document not witnessed when . . . signed, but undisputed as valid." (Boldface type omitted.)

Based on its factual findings, the Special Master concluded that Vincenzo's claims against Michael and Rosalba were without merit. The Special Master found the sale to be valid, but ordered Michael to pay an amount reflecting a 25 percent interest in the property to Belina and Lerald. The Special Master also ordered Belina to move her trailer off the property "within a reasonable period of time not to exceed 45 days."

Proceedings After Special Master Lodged Report

The Special Master submitted his statement of decision to the court and to the parties on October 3, 2005. The court thereafter stated it would hold the report to the next hearing (scheduled for October 14) before entering it as a final order, permitting the parties to assert any objections. At the October 14 hearing, neither Vincenzo nor his counsel appeared (despite that they had notice of the hearing), nor did they file any written objections to the filing of the statement of decision. The court thus entered the final order on that date.^[2]

DISCUSSION

I. Legal Principles Governing Reference Procedure and Standard of Review

Code of Civil Procedure section 638 provides that a referee may be appointed upon agreement of the parties. (See Kajima Engineering and Construction, Inc. v. Pacific Bell (2002) 103 Cal.App.4th 1397, 1401.) Where, as here, the parties voluntarily refer the matter to a special master for decision, the special master must file a statement of decision and the court is required to enter judgment on this decision. (See Code Civ. Proc., § 644; Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 2005) ¶ 6:246, p. 6-62.)

On appeal, we review the special master's findings as if they were findings of the court, applying the same standards of review applicable to a judgment. (See Sy First Family Ltd. Partnership v. Cheung (1999) 70 Cal.App.4th 1334, 1341.) Thus, we "independently review questions of law and apply the substantial evidence standard to . . . findings of fact." (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 461 (SFPP), fn. omitted.) "'Where findings of fact are challenged . . . , we are bound by the "elementary . . . principle of law . . . that . . . the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted," to support the findings below. [Citation.] We must therefore view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor . . . .'" (Id. at p. 462.)

Vincenzo contends these review standards do not apply in this case because the issues concern real property. There is no legal authority supporting this argument. As with any other issue, a factual determination regarding property ownership, including the parties' underlying intent, must be reviewed under a substantial evidence standard. The cases relied upon by Vincenzo do not support his argument. (See O'Grady v. Superior Court (2006) 139 Cal.App.4th 1423, 1456 [recognizing substantial evidence review applies to credibility determinations, but applying a de novo review to constitutional issue of whether reporter's shield law applied to preclude compelled disclosure of source where there was no "controverted" testimony]; People ex rel. Dept. of Motor Vehicles v. Cars 4 Causes (2006) 139 Cal.App.4th 1006, 1012 [recognizing that "[o]n appeal, we view the evidence in the light most favorable to the judgment, and are bound by trial courts' findings that are supported by substantial evidence"].)

We reject Vincenzo's additional argument that this court should apply the independent review standard because a review of a special master's findings is analogous to a summary judgment. There is no authority for this assertion, and it is unsupported by reasoned analysis. A summary judgment is reviewed de novo because the trial court makes no factual determinations; instead, the court merely determines whether there are any factual determinations to be made. (Code Civ. Proc., § 437c.) This is issue finding, not issue determination, and thus necessarily requires a de novo review. However, in this case the Special Master was required to, and did, resolve numerous factual disputes and evaluate the credibility of the parties. In reviewing a factfinder's resolution of factual issues, we do not examine the evidence independently as on a summary judgment review, but are bound by the factual findings to the extent they are supported by substantial evidence.

II. Vincenzo's Substantial Evidence Challenge Is Without Merit

As his primary appellate contention, Vincenzo contends the Special Master erred in finding that he intended to transfer the property to Michael because the evidence showed he did not intend to transfer the property.

This argument is without merit. The Special Master specifically found Vincenzo signed the grant deed and other transfer documents, understanding that he had previously agreed to transfer the property to his daughter and her husband, and knowing and intending to transfer the property to Michael to prevent the foreclosure and tax sale. The Special Master found the terms of this transfer and sale were understood and intended by all parties (Vincenzo, Belina, Lerald, and Michael), and that Michael paid the agreed purchase price and this price reflected the fair market value.

Vincenzo urges us to reach different factual conclusions. However, as an appellate court, we may not reweigh the evidence or make our own factual inferences. (SFPP, supra, 121 Cal.App.4th at pp. 461-462.) More important, Vincenzo's challenges are unsupported because Vincenzo expressly agreed to waive the reporting of the special master proceedings and thus there is no reporter's transcript of the proceedings. Without a reporter's transcript, we are bound by the Special Master's factual findings. An appellant who attacks a judgment, but supplies no reporter's transcript, is precluded from asserting that the evidence was insufficient to support the judgment. (City of Chino v. Jackson (2002) 97 Cal.App.4th 377, 385.) Under the circumstances, a statement of decision is conclusively presumed to be supported by the evidence. (Ibid.; see Loshonkohl v. Kinder (2003) 109 Cal.App.4th 510, 512; Pringle v. La Chapelle (1999) 73 Cal.App.4th 1000, 1003; County of Los Angeles v. Surety Ins. Co. (1984) 152 Cal.App.3d 16, 23.)

Vincenzo alternatively contends that the facts found by the Special Master do not support a legal conclusion that Vincenzo conveyed the property to Michael. However, this argument is based on Vincenzo's own version of the facts. Vincenzo argues, for example, that the transfer was not unconditional because it contained a condition subsequent that Vincenzo be allowed to live on the property. The Special Master specifically found there was no condition subsequent.^[3]

III. Vincenzo's Contentions Regarding Alleged Fraud Are Unfounded

Vincenzo next argues that his fraud claims should have been upheld because he was "fraudulently induced" to transfer the property, and Michael and Lerald entered into a "fraudulent scheme" to obtain title to the property. However, the Special Master rejected these arguments, and without a reporter's transcript, we are bound by these factual determinations.

We also find unavailing Vincenzo's arguments that: (1) "the uncontested facts [are that he] was told that the property was to be placed in Michael Chapman's name for the purpose of obtaining credit"; and (2) he sent the deed to his daughter "to be held" and not conveyed. These factual arguments were rejected by the Special Master, and we are bound by these findings.

Likewise, Vincenzo's reliance on the fact that Michael asked his girlfriend to notarize the grant deed does not establish fraud. There is no showing that Vincenzo relied on this conduct to his detriment, or that Vincenzo suffered any damages from Michael's conduct. Similarly, the fact that the Special Master found that Belina and Lerald used a portion of the money that Michael sent to Vincenzo as compensation for the sale does not show Michael was involved in this conduct. The Special Master specifically found that Belina and Lerald are "liable to Vincenzo for these funds as a Community Debt."

We also reject Vincenzo's argument regarding a conversion claim against Michael. Vincenzo did not plead this cause of action below, and thus he cannot raise it for the first time here. Moreover, there are no facts to support a conversion claim against Michael.

IV. Vincenzo's Contentions Regarding Claim Against Rosalba Are Without Merit

Vincenzo next argues the Special Master erred in finding that Rosalba was not liable for violating her notary duties.

Under Government Code section 8214, a notary is responsible in a civil action "for all the damages sustained" to all persons injured by the notary's official misconduct or neglect. (See Greeninger v. New Amsterdam Cas. Co. (1957) 152 Cal.App.2d 645, 646.) However, a notary is not liable if the failure to satisfy all statutory requirements is not the proximate cause of damage or injury to the plaintiff. (Kirk Corp. v. First American Title Co. (1990) 220 Cal.App.3d 785, 812.) "Civil liability for neglect of notarial duties can only be predicated on the existence of damages proximately caused by the conduct of the notary." (Ibid.; see Burck v. Buchen (1941) 46 Cal.App.2d 741, 746.)

In this case, the Special Master found Rosalba may have breached her notary duties by notarizing the grant deed without personally witnessing Vincenzo sign the document, but that Vincenzo did not suffer damages proximately caused by this breach.

In challenging this factual finding, Vincenzo contends that as "a direct result of [Rosalba's] acts, Michael Chapman was able to obtain the property . . . . He was able to deprive [Vincenzo] of what was to have been his home for the rest of his life."

This contention is unsupported. The Special Master found that Vincenzo did not have the grant deed notarized when he signed it because he had difficulties notarizing the document in Italy since he had recently changed his name. The Special Master further found that Vincenzo knew and understood and intended that by sending the grant deed to his daughter the property would be transferred. Under these circumstances, the fact that Rosalba allegedly violated statutory requirements to further Vincenzo's intent cannot be a basis for holding Rosalba liable to Vincenzo for civil damages.

V. Motion for Sanctions

Michael moved for sanctions against Vincenzo, and his attorney, for filing a frivolous appeal. Although there is a substantial basis to grant this request (see In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650), we are persuaded that the better course of action is to deny the request and bring this dispute to an end. We nonetheless admonish Vincenzo, and particularly his counsel, that in the future, counsel should carefully consider applicable legal principles before making the decision to prosecute an appeal. We note further that the record shows Vincenzo and/or his daughter remain living in a trailer on the Valley Center property based on a claim that the ownership of the property is uncertain because of this pending appeal. This appellate decision ends that uncertainty. There is no legal or factual basis for Vincenzo's appeal, and any continued reliance on this civil matter to continue to challenge Michael's ownership of the property would be subject to a potential sanctions award.

DISPOSITION

We affirm the judgment. We reject Michael's request for sanctions on appeal. Vincenzo to pay respondents' costs on appeal.

HALLER, J.

WE CONCUR:

BENKE, Acting P. J.

O'ROURKE, J.

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^[1] We refer to the parties by their first names to avoid confusion among family members.

^[2] Although the final order was never converted into a "judgment," we construe the order as a judgment because it resolved all of the claims between the parties on the Vincenzo civil action.

^[3] We reject Michael's contention that Vincenzo waived his right to challenge the sufficiency of the evidence by failing to first raise this challenge in the trial court after the Special Master filed the statement of decision. Because a trial court is bound to enter the statement of decision as a final judgment (Code Civ. Proc., § 644, subd. (a)), a party need not preserve this appellate contention by raising the issue first in the trial court.