Filed 2/16/18 Marriage of Cordova CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE


In re the Marriage of MIKE ALEX CORDOVA and CARMEN CORDOVA.

MIKE ALEX CORDOVA,
Respondent,
v.
CARMEN CORDOVA,
Appellant.


A150920

(Contra Costa County
Super. Ct. No. MSD13-04533)


Carmen Cordova appeals from an order following a trial on reserved issues in this dissolution action that included the characterization of certain pieces of real property. She contends the trial court erred by: (1) characterizing five rental properties and a family residence purchased in her name alone as community property; (2) awarding her former husband Mike Alex Cordova 100 percent of the value of two rental properties and 50 percent of the value of the family residence, pursuant to Family Code section 1101 ; (3) determining she breached her fiduciary duty as a spouse by defaulting on the mortgages of two jointly-owned properties after separation; and (4) requiring her to pay attorney fees to Mike as a sanction. We affirm in part and reverse in part.
I. BACKGROUND
Carmen and Mike were married in 1993 and have two children. The couple established the Perfect House Cleaning business in 1998, and purchased the Glenn Allen Carpet Cleaning business in 2003. Carmen and Mike held joint title to a rental property located at 221 Mitchum Drive in Pittsburg, California and to the family residence located at 1077 Nursery Lane in Concord, California.
In 2006 or 2007, Carmen and Mike separated. During this time, Mike started a business called MC Cleaning while Carmen took over the management of their Perfect House Cleaning business. Mike also bought a property on Walters Way in Concord. Carmen signed an interspousal transfer deed to make the Walters Way property Mike’s sole and separate property.
The couple reconciled in 2007, with Carmen continuing to manage Perfect House Cleaning and Mike continuing to manage MC Cleaning and Glenn Allen Carpet Cleaning. Carmen also worked part time at Kaiser Permanente.
The property on Walters Way became severely devalued and was ultimately sold in a short sale or foreclosure. Because of this, “the banks were after” Mike for the balance he owed on the $300,000+ loan.
At about the same time, the couple’s businesses began to grow and they were able to save money, much of it in cash. Five condominiums were purchased in cash in Carmen’s name as rental/investment properties: 2410 Starlight Lane in Antioch, purchased for $46,000 on January 21, 2009; 156 Tammy Circle in Bay Point, California, purchased for $50,000 on April 1, 2009; 2209 Peppertree in Antioch, California, purchased for $36,000 on November 18, 2009; 2119 Peppertree in Antioch, purchased for $30,000 on December 16, 2009; and 1025 Mohr Lane in Concord, purchased for $105,000 on November 24, 2010. Mike signed interspousal transfer deeds deeding each property to Carmen as her sole and separate property.
In February 2010, the couple formed a limited liability company known as Tammy, LLC, naming “Mike Cordova and Carmen Cordova, as Husband and Wife” as the sole member. Title to the five condominiums was transferred by Carmen to Tammy, LLC via grant deeds.
In October 2011, Mike filed a petition for personal bankruptcy under Chapter 7, listing only the Nursery Lane and Mitchum Drive properties as assets. He did not list any of the condominiums held by Carmen. Mike obtained a discharge of his unsecured debts in 2012.
In October 2012, the home at 428 Zinfandel Circle in Clayton, California was purchased in Carmen’s name for $550,000, using a $300,000 cash down payment and financing the rest with a private short-term loan at a high interest rate. Mike signed an interspousal transfer deed on October 30, 2012, transferring his interest in the property to Carmen.
By the end of 2012, three of the condominiums held by Tammy, LLC had been sold to third parties: 2209 Peppertree, 2119 Peppertree and 1025 Mohr Lane. In June 2013, Carmen executed quitclaim deeds on the remaining two condominiums, 156 Tammy Circle and 2410 Starlight Lane, to her mother, who was joined by the court as a third party claimant in this action but who did not appear. Carmen also dissolved Tammy, LLC. Mike did not know about the transfers or the dissolution of the LLC.
Carmen and Mike separated in August 2013 and Mike filed a petition for dissolution of the marriage in September 2013. Also in September 2013, Carmen’s mother sold the Tammy Circle and Starlight Lane condominiums to third parties. Carmen stopped making mortgage payments on the Mitchum Drive and Nursery Lane properties and both were sold in short sales, with the proceeds being shared equally by the parties.
The trial court entered a status-only judgment of dissolution in November 2014 and held a trial on reserved issues that included child support, the characterization of the condominiums and the Zinfandel Circle property, and whether an award of sanctions and attorney fees against Carmen was appropriate. As Carmen does not challenge the child support ordered, we discuss only those facts relevant to the characterization of the properties and the award of sanctions.
Carmen testified that after she and Mike reconciled following their first separation in 2007, they had agreed to keep their finances separate with the exception of joint expenses for the family residence and for their children. Accordingly, they operated their separate cleaning businesses and maintained separate bank accounts as to each. Carmen understood that her income from Perfect House Cleaning was her separate property, and she used her earnings from that business to buy the Zinfandel Circle house and the five condominiums that were transferred into Tammy, LLC. She did not obtain Mike’s permission to transfer the Tammy Circle and Starlight Lane condominiums to her mother because she considered those properties to be hers alone. She also considered the Zinfandel Circle home to be her separate property. Carmen claimed she did not understand that Mike was a co-member of Tammy, LLC.
Mike, on the other hand, testified that there was no agreement with Carmen to keep their finances separate after they reconciled in 2007. The money used to buy the five condominiums was taken from income the couple had earned during their marriage, and Mike was active in managing them. They were placed in Carmen’s name alone to insure they would not be used to satisfy Mike’s debt on the Walters Way property. “On Walters Way, they were trying to get money from me because, you know, I bought it very high and it was short sale, so the bank was trying to get it from me, so I always kept my accounts, you know, with low money. So if I have—if I have the—[those places], credit the places to my name, I was afraid that they would take it from me just to pay the account that I have to Walters, so I will sign the —deed to Carmen.” The $300,000 in cash used for the down payment on the Zinfandel Circle property was similarly money that the two of them had saved together, and they bought that property with the intent of making it the family home. Mike did not go on title to that property and was not added to the loan because he had been told by bank officers and his mortgage broker that his bankruptcy would make it difficult for them to refinance when the short term loan on the property became due in two years. He never intended to give that property to Carmen.
The mortgage broker, Daniel Bowers, testified that he was the co-owner of a private equity company that arranges short-term debt-equity loans on real property. He was a housekeeping client of Mike’s for a number of years, and he arranged for Carmen to take out a 24-month loan on the Zinfandel Circle property. Bowers testified that he met with both Mike and Carmen regarding the loan, and although he did not specifically advise Mike to deed the house to Carmen, he would typically discuss with clients their strategy for exiting short term loans (refinancing, lump sum occurrence, etc.).
The trial court found that the condominiums and the Zinfandel Circle property had been purchased with community funds during the marriage and were therefore community property. It rejected Carmen’s argument that the interspousal transfer deeds executed by Mike had been effective to transmute his community property interest in those assets. The court found that Carmen had breached her fiduciary duty to Mike under section 721, subdivision (b), by (1) attempting to claim the Zinfandel Circle house as her separate property; (2) deeding the condominiums to her mother without Mike’s knowledge; and (3) failing to pay the mortgages on the Mitchum Drive and Nursery Lane properties and instead paying for the loan and for improvements on the Zinfandel Circle house. It awarded Mike 50 percent of the highest fair market value of Zinfandel Circle (that value to be subsequently determined) pursuant to section 1101, subdivision (g). As to the Tammy Circle and Starlight Lane condominiums that Carmen had transferred to her mother, the court awarded Mike 100 percent of their fair market value ($183,000 and $90,000, respectively) under section 1101, subdivision (h). The court also ordered Carmen to pay Mike $40,012.17 in attorney fees and $7,654.31 in sanctions under section 1101, subdivision (g).
II. DISCUSSION
A. Appealability
The trial court issued a proposed statement of decision on August 17, 2015. Carmen filed written objections, Mike filed a response to those objections, and the court filed a modified statement of decision on September 23, 2016. Pursuant to rule 3.1590(h) of the California Rules of Court, the court ordered Mike “to prepare, serve, and submit the proposed Judgment on Reserved Issues to the court within 10 days of today.” No judgment has apparently been entered. On March 15, 2017, Carmen filed a notice of appeal from the modified statement of decision.
As a threshold matter, we consider whether the statement of decision is appealable. Subject to exceptions not relevant here, appeals may be taken only from final judgments, not from interlocutory orders or judgments. (Cal. Code. Civ. Proc., § 904.1, subd. (a)(1); Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 697.) There are two aspects to our inquiry: (1) is the modified statement of decision an order or judgment from which an appeal might be taken; and (2) is it final within the meaning of the one final judgment rule?
Although a statement of decision generally is not appealable, “[r]eviewing courts have discretion to treat statements of decision as appealable when they must, as when a statement of decision is signed and filed and does, in fact, constitute the court’s final decision on the merits.” (Alan v. American Honda Motor Co., Inc. (2007) 40 Cal.4th 894, 901.) The statement of decision in this case is signed, filed, and contains a section entitled “Court Orders.” It is clearly intended to constitute the court’s decision on the merits with respect to the issues it determined. (See Estate of Reed (2017) 16 Cal.App.5th 1122, 1125–1128 [statement of decision containing order removing a fiduciary was appealable, but prior order referencing forthcoming written decision on the findings underlying that same order was not appealable].)
We next consider whether there were other issues still pending before the court that preclude it from being treated as a final, appealable judgment. Carmen acknowledges in her opening brief that the appeal is technically “premature,” but indicates she filed her notice of appeal because “the 180 day limit for filing a Notice of Appeal was approaching (Cal. Rules of Court, rule 8.104(a)(1).)” Mike states in his respondent’s brief that his counsel “has indeed submitted, as instructed, the proposed Judgement on Reserved Issues” based on the modified statement of decision, but he asserts that a judgment cannot be entered at this time because there are still issues pending. Mike’s assertion is not accompanied by any citation to the record, but we note that in the modified statement of decision, the court reserved jurisdiction over one issue—the value to be assigned the Zinfandel Circle property. Mike therefore appears to be correct that there are issues yet to be resolved.
Because the modified statement of decision is not a final judgment, we lack jurisdiction over this appeal. (See In re Marriage of Doherty (2002) 103 Cal.App.4th 895, 898; In re Marriage of Ellis (2002) 101 Cal.App.4th 400, 404.) Nevertheless, Mike does not object to the appeal proceeding, and the parties have fully briefed the issues concerning the characterization of real property and breaches of fiduciary duty that were resolved by the statement of decision. In the interests of judicial economy, we exercise our discretion to treat the appeal as a petition for extraordinary review and review the issues presented on their merits. (Ibid.)
B. Characterization of the Condominiums as Community Property
The trial court found that Tammy, LLC and the five condominiums it held were community property. It concluded the interspousal transfer deeds signed by Mike did not meet the statutory requirements for written transmutations of property between spouses. Carmen disputes this determination, which was also the foundation for the court’s imposition of sanctions under section 1101, arguing that the evidence established the condominiums were her separate property as a matter of law. As we explain, we agree in part.
1. General Principles
Section 760 provides, “Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.” This statute establishes a rebuttable presumption that property acquired by either spouse during marriage is community property, and the party seeking to rebut this presumption has the burden of doing so by a preponderance of the evidence. (In re Marriage of Ettefagh (2007) 150 Cal.App.4th 1578, 1580; see § 802.)
“Both before and during marriage, spouses may agree to change the status of any or all of their property through a property transmutation. (§ 850.) A transmutation is an interspousal transaction or agreement that works a change in the character of the property.” (In re Marriage of Campbell (1999) 74 Cal.App.4th 1058, 1062.) Married persons may “[t]ransmute community property to separate property of either spouse” (§ 850, subd. (a)) or “[t]ransmute separate property of either spouse to community property” (§ 850, subd. (b)).
As to transmutations occurring after 1985, section 852, subdivision (a), provides: “A transmutation of real or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.” This requires “(1) a writing that satisfies the statute of frauds; and (2) an expression of intent to transfer a property interest.” (Estate of Bibb (2001) 87 Cal.App.4th 461, 468–469 (Bibb); see In re Marriage of Holtemann (2008) 166 Cal.App.4th 1166, 1172 (Holtemann).) The courts have interpreted the “express declaration” language of section 852, subdivision (a), as requiring a writing that on its face coveys “a clear and unambiguous expression of intent to transfer an interest in the property,” independent of extrinsic evidence. (Bibb, at p. 468.) The writing must contain “language which expressly states that the characterization or ownership of the property is being changed.” (Estate of MacDonald (1990) 51 Cal.3d 262, 272 (MacDonald).)
The “form of title” presumption of Evidence Code section 662, which states that “[t]he owner of the legal title to property is presumed to be the owner of the full beneficial title,” does not apply when it conflicts with the transmutation statutes. (In re Marriage of Valli (2014) 58 Cal.4th 1396, 1399, 1406 (Valli).) Property that is purchased in the name of one spouse during the marriage will not be treated as separate property unless the transmutation requirements of section 852 have been satisfied. (Ibid.)
A reviewing court will generally apply a substantial evidence standard of review to the trial court’s characterization of property as separate or community. (In re Marriage of Brandes (2015) 239 Cal.App.4th 1461, 1472.) “ ‘However, when the resolution of the issue “ ‘requires a critical consideration, in a factual context, of legal principles and their underlying values,’ ” the issue is a mixed question of law and fact in which legal issues predominate, and de novo review applies.’ ” (Ibid.) Because it involves the interpretation of written documents without resort to extrinsic evidence, the question of whether a writing satisfies sections 852, subdivision (a), is subject to independent review. (In re Marriage of Barneson (1999) 69 Cal.App.4th 583, 587 (Barneson).)
2. Analysis
The evidence in this case established that Carmen purchased the condominiums during the marriage using community funds, i.e., cash earned by the couple’s housekeeping businesses. Thus, the condominiums were presumptively community property. Although Carmen took title in her name alone when the condominiums were purchased, the form of title did not trigger a presumption of separate property under Evidence Code section 662, and the condominiums could not be treated as Carmen’s separate property absent proof of a valid transmutation under section 852, subdivision (a). (Valli, supra, 58 Cal.4th at p. 1406.) Carmen argues that such a transmutation occurred when Mike signed the interspousal transfer deeds conveying the condominiums to Carmen as her separate property.
The interspousal transfer deed for the Tammy Circle property cannot be located and was not before the court. Although Evidence Code section 1523 permits oral testimony of the contents of a writing that has been lost or destroyed, this evidentiary rule does not overcome the substantive requirement that a transmutation under section 852, subdivision (a), can occur only where there is a writing containing an express declaration “which enables [the court] to validate transmutations without resort to extrinsic evidence.” (MacDonald, supra, 51 Cal.3d at p. 272.) Thus, there was no valid, written transmutation of the community property interest in Tammy Circle. Or, to be more precise, there is no admissible evidence to establish that a valid transmutation occurred; hence the Tammy Circle condominium must be deemed community property in accordance with the presumption under section 760 and Vail, supra, 58 Cal.4th at page 1406.
We reach a different conclusion regarding the remaining four condominiums, for which interspousal transfer deeds were produced.
As to the Starlight Lane condominium, Mike signed an interspousal transfer grant deed on January 16, 2009, which stated in relevant part, “FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, ________ hereby GRANTS to Carmen Cordova, a married woman as her sole and separate property the following described property. . . .” As to the 2119 Peppertree condominium, Mike signed an interspousal transfer deed on January 11, 2010, which stated in relevant part: “FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Mike A. Cordova, husband of the grantee herein, [¶] hereby GRANT(S) to Carmen Cordova, a married woman as her sole and separate property [¶] the [described] property. . . . The grantor is executing this instrument for the purpose of relinquishing all of grantor’s rights, title and interest, including, but not limited to, any community property interest in and to the land described herein and placing title in the name of the grantee as his/her separate property.”
As to the Mohr Lane condominium, Mike signed an interspousal transfer grant deed on November 24, 2010, which stated in relevant part, “FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Mike A[.] Cordova, a married man, hereby GRANTS to Carmen P. Cordova, a married woman as her sole and separate property the following described property. . . . It is the express intent of the Grantor, being the spouse of the Grantee, to convey all right, title and interest of the Grantor, community or otherwise, in and to the herein described property to the Grantee as his/her sole and separate property.” Finally, as to the 2209 Peppertree Lane condominium, Mike signed an interspousal transfer grant deed on February 18, 2011, stating in relevant part, “FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Mike A. Cordova, husband of grantee[,] [¶] hereby GRANTS to Carmen Cordova, a married woman as her sole and separate property the following described property. . . . It is the express intent of the Grantor, being the spouse of the Grantee, to convey all right, title and interest of the Grantor, community or otherwise, in and to the herein described property to the Grantee as his/her sole and separate property.”
A grant deed is, by definition, an express declaration of a transfer of interest in real property. In Bibb, supra, 87 Cal.App.4th at page 463, the court held that a grant deed signed by a husband transferring his separate property interest in an apartment building to himself and his wife as joint tenants satisfied the “express declaration” requirement of section 852, subdivision (a), because it contained on its face a clear and unambiguous expression of intent to transfer the real property interest. “[S]ince ‘grant’ is the historically operative word for transferring interests in real property, there is no doubt that [the husband]’s use of the word ‘grant’ to convey the real property into joint tenancy satisfied the express declaration requirement of section 852, subdivision (a).” (Id. at pp. 468–469.)
The same is true of the interspousal transfer deeds in the present case, all of which contain the “grant” language found sufficient in Bibb and three of which contain even more explicit language transmuting the property from community to separate property. There is no evidence Mike did not understand the legal effect of the deeds. There is only evidence that his sole purpose in executing the deeds was to protect the property from his creditors. (Compare In re Marriage of Matthews (2005) 133 Cal.App.4th 624, 631–632 [quitclaim deed executed by wife for purpose of obtaining lower interest rate on mortgage upheld as valid transmutation].) Having executed the interspousal transfer deeds, Mike satisfied both the writing and the “express declaration” requirements of section 852, subdivision (a). The trial court was incorrect in concluding the deeds “did not “[meet section 852, subdivision (a)]’s requirements for clear written transmutations.”
Carmen did not transmute the condominiums back into community property by transferring them to Tammy, LLC. Mike was named as a member of the limited liability company but this did not confer an ownership interest in the specific property to which the company held title. (Swart Enterprises, Inc. v. Franchise Tax Board (2017) 7 Cal.App.5th 497, 510; Kwok v. Transnation Title Ins. Co. (2009) 170 Cal.App.4th 1562, 1570; Former Corp. Code, § 17300.) Moreover, the grant deeds executed by Carmen in favor of Tammy, LLC state: “Direct or indirect proportional interests in the property remain the same and beneficiary interests remain the same.” The deeds did not transfer Carmen’s separate property interest in the properties, as was necessary for valid transmutations under section 852, subdivision (a).
Mike argues that the condominiums were community property because the interspousal transfers to Carmen were invalid under section 721, subdivision (b), under which a transaction in which one spouse gains an advantage over the other is presumed not to have been freely and voluntarily made. (See Campbell, supra, 74 Cal.App.4th at p. 1064.) Although the trial court found that Carmen breached her fiduciary to Mike when she transferred the condominiums to her mother (and when she attempted to have the Zinfandel Circle house declared her separate property), it made no such finding with respect to the transfers from Mike to Carmen, and we will not make such a finding for the first time on appeal. Moreover, the presumption of undue influence with respect to the transactions was clearly rebutted by evidence that Mike voluntarily transferred the condominiums to Carmen because he owed money to a bank following the short sale of his separate property on Walters Way and he did not want the bank to seize the condominiums to satisfy that debt. Mike cannot have his cake and eat it too by claiming he only conditionally transmuted the property to protect it from creditors. “[W]e are not aware of any authority for the proposition that a transmutation, once effected, can be limited in purpose or otherwise rendered conditional or temporary.” (Holtemann, supra, 166 Cal.App.4th at p. 1174.)
Finally, we do not agree with the trial court that Mike’s involvement in managing the condominiums was a basis for characterizing it as community property. “Once the character of the property has been changed, a ‘retransmutation’ can be achieved only by an express agreement to that effect that independently satisfies the requirements of subdivision (a) of section 852.” (Holtemann, supra, 166 Cal.App.4th at p. 1174.) Allowing the parties’ subsequent conduct to undermine a valid written transmutation would effectively allow them to “re-transmute” the property without the formality of a writing under section 852, subdivision (a).
The condominiums, with the exception of Tammy Circle, were Carmen’s separate property.
C. 428 Zinfandel Circle
Carmen also challenges the trial court’s determination that the Zinfandel Circle house was community property. We reject this claim.
The evidence showed the Zinfandel Circle house was purchased with a $300,000 down payment taken from community funds earned during the marriage. Though Carmen initially took title in her name alone, the property was presumed community property unless there was a valid transmutation under section 852, subdivision (a). (Valli, supra, 58 Cal.4th at p. 1406; § 760.)
Mike signed an interspousal transfer grant deed for Zinfandel Circle on October 30, 2012, which stated, “The grantor is executing this instrument for the purpose of relinquishing all of grantor’s rights, title and interest, including, but not limited to, any community property interest in and to the land described herein and placing title in the name of the grantee as his/her separate property.” But while this deed comported with the formalities of section 852, subdivision (a), this does not end the inquiry where, as here, the trial court found that Carmen breached her fiduciary duty to Mike under section 721, subdivision (b), with respect to that transaction.
A transmutation must comport with special rules pertaining to persons occupying a confidential relationship with one another. “[S]ection 721, subdivision (b) provides in part that ‘in transactions between themselves, a husband and wife are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.’ In view of this fiduciary relationship, ‘[w]hen an interspousal transaction advantages one spouse, “[t]he law, from considerations of public policy, presumes such transactions to have been induced by undue influence.” ’ [Citation.]” (In re Marriage of Kieturakis (2006) 138 Cal.App.4th 56, 84.)
“ ‘The influence which the law presumes to have been exercised by one spouse over the other is not an influence caused by any act of persuasion or importunity, but is that influence which is superinduced by the relation between them, and generated in the mind of the one by the confiding trust which he has in the devotion and fidelity of the other. . . .’ [Citations.]” (In re Marriage of Starr (2010) 189 Cal.App.4th 277, 285 (Starr).) The presumption under section 721, subdivision (b), “is regularly applied in marital transactions in which one spouse has deeded property to the other. . . . In such cases, it is evident one spouse has obtained an advantage—the deeded property—from the other.” (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 730 (Burkle).) Thus, “the broad question whether a valid transmutation of property has taken place depends not only on compliance with the provisions of section 852 but also upon compliance with rules governing fiduciary relationships.” (Barneson, supra, 69 Cal.App.4th at pp. 588–589.)
While we independently review whether a writing satisfies section 852, subdivision (a) (Barneson, supra, 69 Cal.App.4th at p. 587), the issue of undue influence is a question of fact, and a finding that the presumption has not been overcome will not be reversed on appeal if supported by substantial evidence. (Burkle, supra, 139 Cal.App.4th at p. 737.) Here, substantial evidence supports the trial court’s conclusion that Carmen failed to rebut the presumption under section 721, subdivision (b).
The transmutation of the Zinfandel Circle home into Carmen’s separate property conferred a significant advantage to Carmen, as it was purchased with $300,000 in community funds. Mike testified that the home was purchased with the intent of making it their family residence, and he had only signed the interspousal transfer grant deed because he believed that if his name was on the title, his bankruptcy would make it difficult for them to refinance at an advantageous rate when the short-term loan on the property became due in two years. He understood that ultimately, “we were a married couple, so, you know—and later we have to, you know, be both on the deed.”
In Starr, supra, 189 Cal.App.4th at page 286, the husband’s failure to add the wife’s name back onto title of a property despite his promise to do so was found to be constructive fraud and a breach of the confidential relationship under section 721, subdivision (b). Though Starr involved an express promise, it relied on Jones v. Jones (1903) 140 Cal. 587, in which the court affirmed a judgment in favor of a wife who had conveyed her interest in land to the husband to facilitate the eviction of a tenant, only to have the husband transfer the land to a third party who then claimed ownership of the land. By accepting the deed from the wife for the purpose of the eviction, the husband “by implication promised to fulfill the purpose of the trust,” and his failure to follow through was constructive fraud which allowed the court to set aside the deed to the third party. (Jones, at p. 590–591, italics added.) “In short, even when the suggestion to convey came from a third party advisor and no express promises were made by the husband, he impliedly promised to fulfill the conditions of the transfer, and the failure to do so was constructive fraud.” (Starr, at p. 286.)
The trial court in this case could reasonably conclude that Carmen made an implicit promise to Mike to treat Zinfandel Circle as community property notwithstanding the title in which it was held. It could further conclude that her attempt to have Zinfandel Circle declared her separate property was a breach of her fiduciary duty under section 721, subdivision (b), and that consequently, there was no valid transmutation of Mike’s community property interest.
At first blush it may seem contradictory to treat the house on Zinfandel Circle as community property while concluding the four condominiums for which interspousal transfer deeds were signed were Carmen’s separate property. The explanation for this result lies in the different evidence presented with respect to each property, the findings made by the trial court, and the applicable standards of appellate review.
In the case of the condominiums, Mike testified that he signed the interspousal transfer deeds because he did not want a third party creditor to seize those properties. To accomplish this goal, he was required to actually relinquish his interest in the properties. We independently reviewed the interspousal transfer deeds and concluded they satisfied the formalities of section 852, subdivision (a), and were in fact sufficient to relinquish Mike’s interest in the properties consistent with his purpose in signing them. (Barneson, supra, 69 Cal.App.4th at p. 587.) Because the court made no findings that those transmutations were themselves the product of undue influence or a breach of Carmen’s fiduciary duties under section 721, and because substantial evidence would not have supported such a finding in light of Mike’s stated reason for signing the deeds (see Burkle, supra, 139 Cal.App.4th at p. 737), the trial court erred when it concluded the condominiums remained community property.
On the other hand, Mike’s unsecured debts had been discharged in bankruptcy by the time the couple used their savings to purchase Zinfandel Circle, which they intended to occupy together as the family home. Mike testified that he signed the interspousal transfer deed because his bankruptcy would have made it difficult for them to secure favorable refinancing on the property if he had been on title, but he expected he would be placed back on the deed at some future date. The trial court concluded Carmen’s efforts to have the property declared her separate property notwithstanding the couple’s understanding to the contrary was a breach of her fiduciary duty under section 721, subdivision (b), a finding we review for substantial evidence. (Burkle, supra, 139 Cal.App.4th at p. 737.) Because the court actually made a finding under section 721, subdivision (b), with respect to the Zinfandel Circle property, and because that finding was supported by substantial evidence, it must be characterized differently than the condominiums even though it was the subject of a similar interspousal transfer deed.
D. Section 1101 Remedies
Carmen argues trial court erred by granting Mike “value of the asset” relief under section 1101, plus attorney fees and costs. We agree in part.
Section 1101 creates a right of action and specific remedies for the breach of a spouse’s fiduciary duty “that results in impairment to the claimant spouse’s present undivided one-half interest in the community estate,” which may be brought in conjunction with a dissolution action. (§ 1101, subds. (a), (f).) We review an award under section 1101 for substantial evidence. (See In re Marriage of Murray (2002) 101 Cal.App.4th 581, 600–601.)
Under section 1101, subdivision (g), “Remedies for breach of the fiduciary duty by one spouse, including those set out in Sections 721 and 1100, shall include, but not be limited to, an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees and court costs. The value of the asset shall be determined to be its highest value at the date of the breach of the fiduciary duty, the date of the sale or disposition of the asset, or the date of the award by the court.” Under section 1101, subdivision (h), “Remedies for the breach of the fiduciary duty by one spouse, as set forth in Sections 721 and 1100, when the breach falls within the ambit of Section 3294 of the Civil Code shall include, but not be limited to, an award to the other spouse of 100 percent, or an amount equal to 100 percent, of any asset undisclosed or transferred in breach of the fiduciary duty.” As relevant here, Civil Code section 3294, subdivision (a), provides that “[i]n an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (See generally, In re Marriage of Schleich (2017) 8 Cal.App.5th 267.)
The trial court awarded Mike 50 percent of the value of the Zinfandel Circle residence under section 1101, subdivision (g), plus attorney fees and costs. Because we have concluded that substantial evidence supports the determination that Carmen breached her fiduciary duty under section 721, subdivision (b), with respect to that property, the court properly awarded Mike 50 percent of the value of that asset plus the attorney fees and costs that are mandatory under that section if such a breach is found. (See In re Marriage of Hokanson (1998) 68 Cal.App.4th 987, 993 (Hokanson).)
The court also awarded Mike 100 percent of the value of the Starlight Lane and Tammy Court condominiums, finding that Carmen committed fraud under Civil Code section 3294 when she transferred those properties to her mother. We have concluded Starlight Lane was in fact Carmen’s separate property, meaning she did not breach a fiduciary duty when transferring it to her mother, and the $90,000 award for Starlight Lane be reversed.
Tammy Court, on the other hand, must be treated as community property because the interpousal transfer deed for that property cannot be located. But because the interspousal transfer deeds for the other condominiums were legally sufficient transmutations under section 852, subdivision (a), and because Mike admits he signed a similar deed for Tammy Court, the evidence does not support a finding that Carmen’s subsequent transfer of Starlight Lane to her mother was “fraud” under Civil Code section 3294.) “ ‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (§3294, subd. (c)(3).) The remedy for this transfer is limited to 50 percent of the asset’s value under section 1101, subdivision (g).
E. Award of Expenses Based on Mismanagement
The trial court found that Carmen also breached her fiduciary duty to Mike by failing to pay the mortgages for the homes on Mitchum Drive and Nursery Lane, causing defaults and short sales. The court ordered her to pay Mike the $2,750 she collected in rent on Mitchum Drive in August and September 2013, plus $16,200 ($1,800 per month) for the mortgage payments that were due on Nursery Lane while Carmen resided there from August 2013 through April 2014.
The trial court’s award was made pursuant to sections 721, 1100 and 1101. Carmen argues it was unauthorized because section 721, subdivision (b), provides that the confidential relationship between spouses “is a fiduciary relationship subject to the same rights and duties of nonmarital business partners, as provided in Sections 16403, 16404, and 16503 of the Corporations Code,” and Corporations Code section 16404, subdivision (c), states that “[a] partner’s duty of care to the partnership and the other partners in the conduct and winding up of the partnership business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional conduct, or a knowing violation of law.” Carmen contends her management of Mitchum Drive and Nursery Lane after the date of separation would have to be at least grossly negligent to warrant sanctions, and she argues that her failure to make mortgage payments did not rise to that level of misconduct.
We disagree. By collecting rents on Mitchum Drive without payment the mortgage on that property, and by continuing to live at Nursery Lane without paying the mortgage, Carmen engaged in intentional conduct by which she benefitted at the expense of Mike’s community interest. Though she claims it was reasonable to allow two properties that were “underwater” to go into default, the trial court could reasonably conclude that by making this decision without consulting Mike, she had breached her fiduciary duty to him. Substantial evidence supports this aspect of the trial court’s order.
III. DISPOSITION
We dismiss the appeal and issue a peremptory writ of mandate directing the trial court to vacate its order on reserved issues, which was memorialized in the modified statement of decision filed September 28, 2016, and to issue a new and different order (1) finding the property at 2410 Starlight Lane to be Carmen’s separate property; (2) omitting the award to Mike of $90,000 for 2410 Starlight Lane pursuant to section 1101, subdivision (g); and (3) modifying the award to Mike of $183,000 for 156 Tammy Circle pursuant to section 1101, subdivision (h), to an award of $91,050 (50 percent the value of the property), pursuant to section 1101, subdivision (g). The parties shall bear their own costs.
 

NEEDHAM, J.



We concur.




JONES, P.J.




BRUINIERS, J.









(A150920)