CASE BRIEF: Mathews (2005) 133 CA 4th 624

GUIDANCE PROVIDED BY COURT CASES
CASE ANALYSIS
Mathews (2005) 133 CA 4th 624
SCRUTINY AND REVIEW OF MARITAL TRANSMUTATION AGREEMENTS:

When it can be shown that a transmutation agreement substantially benefits one spouse over another, a presumption of undue influence will be applied when the court scrutinizes and reviews the transmutation agreement.

FACTS of In Re Mathews:

Yatsuko Mathews (Wife) appeals a judgment in favor of Todd Mathews (Husband) in a marriage dissolution proceeding awarding Husband their residence as his separate property. This action arose when the parties could not agree on the characterization of the residence, which Wife had quitclaimed to Husband.

In 2002 the couple purchased the residence at issue for $156,655 in El Cajon, California. To obtain a more favorable interest rate on a mortgage Wife quitclaimed her interest in the residence to Husband, and the residence was acquired in his name alone. The quitclaim deed was validly executed and recorded. Wife acknowledged the residence was acquired solely in Husband's name but believed her name would be added to the title at a later date. Throughout the marriage, Wife and Husband both believed the residence was community property and after the separation discovered title to the residence was in his name alone....substantial evidence supports the court's findings that no undue influence existed and the residence is Husband's separate property.

HOLDING: Court found in favor of husband, and that husband overcame presumption of undue influence

RATIONALE FOR HOLDING:

Husband's most difficult factor in overcoming the presumption of undue influence was showing Wife had a complete understanding of the effect [133 Cal.App.4th 632] of the quitclaim deed. Wife contends that language barriers limited her comprehension of the purchase of the residence. However, the record shows Wife was above average in her English skills and competent to complete a college certification course taught in English. She spoke English from the time she met Husband and eventually worked as a translator, suggesting a more than adequate command of the English language. Further, Husband entrusted almost all financial matters to wife, relying on her judgment and management. Wife had separate investment accounts and made her own investment decisions with those accounts. She controlled both her income and Husband's, and paid all of the household bills. Wife acknowledged her bad credit rating prevented her and Husband from receiving a lower interest rate if they both acquired title to the residence, and made a conscious decision to sign the quitclaim deed. Wife further admitted to knowing her name was not on the title and assumed it would be added later. On this record, there is no basis for overturning the trial court's decision that the quitclaim deed was valid and executed freely and voluntarily in good faith. Husband rebutted the presumption of undue influence by a preponderance of the evidence.

EVIDENTIARY STANDARD REQUIRED TO OVERCOME THE PRESUMPTION OF UNDUE INFLUENCE:

A preponderance of the evidence is required to overcome the presumption of undue influence.

Although some authority requires clear and convincing evidence to rebut the presumption (Bank of America v. Crawford (1945) 69 Cal.App.2d 697, 701), the weight of authority concludes the burden of rebutting the presumption of undue influence is by a preponderance of the evidence. (See Estate of Stephens (2002) 28 Cal.4th 665, 677; Estate of Gelonese (1974) 36 Cal.App.3d 854, 863.) Moreover, Evidence Code section 115 defines burden of proof and states, "Except as otherwise provided by law, the burden of proof requires proof by a preponderance of the evidence." Because section 721does not specify a greater burden, Husband may overcome the presumption of undue influence by a preponderance of the evidence.
Mathews (2005) 133 CA 4th 624, at p. 631

FURTHER GUIDANCE FROM In Re Mathews CASE:

EVIDENTIARY FACTORS THAT MAY REBUT PRESUMED UNDUE INFLUENCE:
Party seeking to overcome the presumption must establish by a preponderance of the evidence that the transmutation agreement was:

1. Freely and voluntarily made;
   
2. With full knowledge of the facts,
3. With a complete understanding of the effect of the transmutation.

Haines and Family Code section 721 do not specifically delineate an evidentiary standard for overcoming the presumption of undue influence; however, Haines does specify several factors that rebut the presumption of undue influence. These factors include evidence the quitclaim deed was freely and voluntarily made, with a full knowledge of all the facts and with a complete understanding of the effect of the quitclaim deed. (Haines, supra, 33 Cal.App.4th at p. 296.) Mathews (2005) 133 CA 4th 624, at p. 630.