Marriage of Cervantes and Rodriguez
FACTUAL AND PROCEDURAL BACKGROUND
Fifteen years into their marriage, in December 2001, Josefina and Jose purchased a home on Verona Road in Cathedral City. They separated several years later, in April 2010, and judgment on the dissolution of their marriage was entered in June 2011. According to their settlement agreement incorporated into the judgment, Josefina would receive an SUV and a Chase account as her share of the community property, while Jose would receive a truck, a Bank of America account, a Chase account, and retirement accounts from the Roman Catholic Archdiocese (his employer) and Country Villas (her employer). The marital home was not listed in either the community property or community debts sections of the agreement. Instead, the agreement included the following handwritten entry under “Miscellaneous Orders“:
“Reserved: Residence located [on] Verona Rd, Cathedral City, CA. Respondent to have exclusive use and possession and to pay all mortgage debt аnd insurance. Petitioner agrees to cooperate as necessary when Respondent is ready to refinance.”
In a responsive declaration, Jose explained that at the time of their divorce, the parties mutually understood that he would keep the house, which meant he wоuld assume a significant debt because the house had no equity at the time. Two years later, the parties “renegotiated” the terms of their property division out of court. Jose agreed to let Josefina keep her Country Villas retirement account that he was awarded in the divorce. In return, she agreed to deed the house to him. He also noted that, since the divorce, he had been solely responsible for paying the mortgage, taxes, insurance, and maintenance costs, and had made significant improvements that increased the value of the property.
The trial court heard the matter on August 6, 2024. At the hearing, Josefina stated that she did not know whether the house was “upside down” at the time of the divorce and she was unaware of the Country Villas retirement account. She conceded that she had not paid any bills for the property since the divorce and that she quitclaimed the property to Jose in 2013. She seemed to believe, however, that signing the deed would modify the mortgage payment without affecting her ownership.
As the court interpreted the judgment, the parties bargained for Jose to take over the house, pay for it, and eventually refinance in his name.
In August 2024, Jose sold the house for $450,000 and received $223,027.84 in profits. Soon thereafter, Josefina, now represented by counsel, filed a motion for reconsideration. She requested Watts charges to reimburse the community for all the years Jose exclusively used and possessed the property at its fair rental value. (See In re Marriage of Watts (1985) 171 Cal.App.3d 366, 372–374.) At the same time, she recognized that Jose would be entitled tо Epstein credits for his payments on the property from the time of the divorce until the sale of the property. (See In re Marriage of Epstein (1979) 24 Cal.3d 76, 80, 82–84.)
The court granted the request for reconsideration and held an evidentiary hearing on May 7, 2025. Josefina testified that at the time of the divorce she did not believe she was giving the house to Jose. Shе acknowledged, however, that she agreed Jose would keep the property because she could not afford it on her own. Josefina also conceded that she had not made any financial contributions toward the property since the divorce and that she never asked Jose to рay her rent or sought reimbursement through the court. On the latter point, she explained that she did not attempt to seek reimbursement for her share of the property until now because she “didn‘t know [her] rights” or “that there was something
According to Jose, when they divorced, Josefina told him to keep the house. She did not want anything to do with it. When he signed the judgment in 2011, he believed he owned the house. The parties stipulated that at the time of their divorce, the property was subject to an interest-only fixed rate note with a principal amount of $214,000.00. In the years that followed, Jose paid $247,585.66 for the mortgage and taxes alone. In addition, he testified that he spent about $26,500 on upgrades and repairs—$15,000 to replace the air conditioner, $4,000 to install new cabinets, $6,000 to repair leaky pipes, and $1,500 to fix the garage door. He did not seek contributions from Josefina for these amounts because “it was [his] house.”
The court ultimately decided that Josefina was not entitled to share in the sale proceeds. Upon reexamining the language of the judgment—giving Jose exclusive use and possession of the property, requiring him to pay the mortgage debt and insurance, and directing Josefina to сooperate when Jose was ready to refinance—the court surmised that the property was a debt assigned to Jose. Even assuming the judgment was ambiguous, the parties’ intent became clear when Josefina executed the quitclaim deed, relinquishing all her rights to the property.
In any event, the court would not award Watts charges to Josefina. It noted there was no indication in the judgment that the parties wished to reserve jurisdiction on Watts or Epstein issues, Josefina‘s testimony made
DISCUSSION
Josefina maintains she is entitled to share in the sale proceеds of the property. She argues the judgment of dissolution did not award the property to either party, and therefore characterizes it as an unadjudicated asset.
As we understand its ruling, the trial court determined that the parties intended for Jose to receive the property at the time of their divorce. In other words, the property was accounted for in the martial settlement agreement incorporated into the judgment of dissolution. Accordingly, we observe that such agreements “are construed under the statutory rules governing the interpretations of contracts generally.” (In re Marriage of Iberti (1997) 55 Cal.App.4th 1434, 1439.) ” ‘The basic goal of cоntract interpretation is to give effect to the parties’ mutual intent at the time of contracting.’ ” (In re Marriage of Simundza (2004) 121 Cal.App.4th 1513, 1518.) “When the language of the judgment incorporating the marital settlement agreement is clear, explicit, and unequivocal, and there is no ambiguity, the court will enforce the express language.” (Iberti, at p. 1440.) When a term of the agreement is ambiguous, however, the court may accept extrinsic evidence to prove the parties’ intent, provided the evidence supports a meaning to which the language is reasonably susceptible. (Id. at p. 1439.) We review the language of a written agreement independently (Simundza, at p. 1518), and the trial сourt‘s findings based on extrinsic evidence for substantial evidence (see In re Marriage of Trearse (1987) 195 Cal.App.3d 1189, 1195).
In our view, the judgment of dissolution is ambiguous as to what the parties intended with respect to the property. The handwritten entry under
To the extent the judgment was ambiguous, the trial court found the extrinsic evidence confirmed the parties’ intent that the property to be given to Jose, and substantial evidence supports that finding. The evidence showed that at the time of their divorce, the parties had zero equity in the property and were making interest-only payments. It makes sense, then, why Josefina would be willing to let it go. Two years later, consistent with the handwritten entry, Josefina deeded the property to Jose, allowing him to refinance in his name. In the decade that followed, Josefina did not take any action consistent with believing she retained an interest in the property—she did not attempt to collect rent from Jose directly or through the court, nor did she contribute to the property in any manner. It was not until the house was selling at a profit that she asserted an interest. Although Josefina claimed at the evidentiary hearing that she did not take action sooner because she did not know her rights or “that there was something for [her]” in the house, the court could reasonably conclude she would have known she retained an interest in the property if that was the parties’ understanding at the time of the divorce.
Insofar as the judgment assigned the property—a debt—to Jose, there was no occasion to award Watts charges. (See In re Marriage of Falcone & Fyke (2012) 203 Cal.App.4th 964, 978 [” ‘Where оne spouse has the exclusive use of a community asset during the period between separation and trial, that spouse may be required to compensate the community for the reasonable value of that use’ ” (italics added)].) Moreover, the record supports the trial court‘s finding that the claimеd Watts charges ($278,900 fair rental value) were almost exactly offset by the estimated Epstein credits ($247,585.66 for the mortgage and taxes plus $26,500 for repairs totals $274,085.66).
Even if we were to accept the premise that the property was unadjudicated in the judgment of dissolution, this would not necessarily entitle Josefina to an equal shаre in the sale proceeds. When a party seeks adjudication of a community estate asset or liability not adjudicated by the judgment, “the court shall equally divide the omitted or unadjudicated community estate asset or liability, unless the court finds upon good cause shown that the interests of justice require an unеqual division of the asset or liability.” (
Josefina also makes multiple arguments centered around the 2013 quitclaim deed. Specifically, she asserts that any agreement she made to deed the property to Jose in exchange for the Country Villas retirement account is invalid because the account does not exist, the agreement was not in writing, and Jose failed to establish the transaction was not the product of undue influence. We need not address these arguments in detail. The trial court (and this court) treat the deed as evidence that the parties intended Jose to keep the property, not as the sole reason Josefina is not entitled to share in the sale proceeds. We note, however, that that the judgment plainly identifies the Country Villas retirement account as a community asset originally awarded to Jose. And the authorities on which Josefina relies (
The order denying the postjudgment motion to divide the property is affirmed. Respondent is entitled to costs on appeal.
DATO, Acting P. J.
WE CONCUR:
BUCHANAN, J.
KELETY, J.