Filed 5/5/21 Marriage of Linett CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
In re the Marriage of BARBARA
and DANA LINETT.
D075178
BARBARA LINETT,
Respondent,
(Super. Ct. No. D545205)
v.
DANA LINETT,
Appellant.
APPEAL from a judgment of the Superior Court of San Diego County,
Gerald C. Jessop, Judge. Affirmed.
Dana Linett, in pro. per., for Appellant.
Law Offices of Beatrice L. Snider and John L. Romaker for Respondent.
Dana Linett (Husband) and his former wife Barbara (Wife) entered into
a Marital Settlement Agreement (MSA) awarding most of the community
property to Husband, and requiring him to pay $2.8 million in an
equalization payment. About 10 months after the MSA was incorporated into
a final judgment, Husband moved to set aside the judgment, claiming he
made a unilateral mistake in believing he could pay the $2.8 million in
property, rather than in cash. (Fam. Code, § 2122, subd. (e).)1
After a nine-day trial, during which Husband testified for about six
days, the court found Husband did not meet his burden of proof on the issue
and denied the motion. Husband appeals. We affirm. The court’s ruling was
supported by the factual record and governing law.
FACTUAL AND PROCEDURAL SUMMARY
Background
Husband and Wife were married in 1991. During their marriage, the
couple operated two businesses out of their home. The businesses involved
buying and selling historical (early American) collectibles.
One of the businesses (referred to as EAN) owned collectibles and the
other business (referred to as EAHA) operated as an auction-consignment
entity selling collectibles. The couple also owned many collectible items in
their personal collection (the parties disputed whether some of these items
were Husband’s separate property). Husband is a well-regarded national
expert in historical collectibles with a detailed knowledge of the items held by
the couple. Wife mainly performed administrative work for the businesses.
The couple’s Rancho Santa Fe home was valued at between $3.5 and $4
million, with about $1.5 million in equity after subtracting the various
encumbrances. The home contained many custom features allowing the
couple to operate the collectibles businesses out of their home (such as a
specially-built vault).
The couple separated in September 2013 when Wife filed for
dissolution.
1 All unspecified statutory references are to the Family Code.
2
After acrimonious disputes over a proper property division and spousal
support, the parties participated in a mediation on December 3, 2014. At the
time, the parties had not determined the value of the community estate for
various reasons, including the inherent difficulty of valuing the collectibles
held by the parties and businesses.
During the mediation, Husband was assisted by his family law
attorneys, his business attorney, and a long-time EAN employee. Wife was
assisted by her family law attorneys. At the end of the day, they agreed on
settlement terms, and during the next several weeks exchanged several
drafts and then reached a more formal agreement (the MSA).
The MSA gave Husband title to almost all the property, including the
EAN and EAHA businesses (and two other businesses), the Rancho Santa Fe
home, and the business and personal collectibles. In exchange, Husband
agreed to pay Wife an “equalization payment” of $2.8 million in installments
over six years. Under the MSA, all of the collectibles would be immediately
released to Husband except for items referred to as the “John Ford
collection,” which would be placed in a safe deposit box to be used as security
if Husband did not satisfy his payment obligations.
Section 14 of the MSA contained the equalization payment obligations
and security provisions, and stated in part:
“A. . . . Husband shall pay Wife the sum of $2,800,000.
This equalization payment is intended to be a tax free
interspousal transfer [for federal and state tax purposes].
The equalization payment shall be paid as follows:
“(1) $100,000 shall be due and payable to Wife within 90
days of the date Wife executes this Agreement.
“(2) $600,000 shall be due and payable to Wife by
September 1, 2015, [and] shall be made payable by
Husband to [Wife’s attorney’s office].
3
“(3) $200,000 shall be due and payable to Wife by
September 1, 2016, [and] shall be made payable by
Husband to [Wife’s attorney’s office].
“(4) Beginning March 1, 2017, and ending September 1,
2020, $200,000 shall be due and directly payable to Wife
every six (6) months (i.e., on March 1st and September 1st
of every year), for a total of eight (8) installment payments.
“(5) A final installment payment of $300,000 shall be due
and payable to Wife on March 1, 2021.” (Italics added.)
The MSA imposed a 10 percent penalty if Husband “is ever late on any
one” payment. Additionally, if Husband defaulted on any equalization
payment, Wife had the right to trigger a sale of the Rancho Santa Fe
residence. The equalization payment was also secured by “Husband’s
complete John Ford collection.” Regarding this security, the MSA provided
that Husband had the right to sell “any or all of the John Ford Collection
items” subject to certain conditions, including the following: “No assets from
the John Ford collection items shall be sold by Husband if Husband is not
current on the equalization payments, until such time as Husband has made
the sixth equalization payment to Wife . . . . After payment of the sixth
equalization payment to Wife, Husband may sell . . . the John Ford collection
items even if he is not current on the equalization payments . . . .” (Italics
added.)
The MSA also required Husband to pay Wife $5,000 in monthly spousal
support, with payments terminating “upon Husband’s full satisfaction of the
equalizing total payment set forth in Section 14 . . . .”
The MSA contained several provisions in which the parties
acknowledged they were reaching agreement without determining the extent
of the community estate or the value of community property assets, and they
understood the property division may not be equal.
4
On December 21, 2014, the parties signed the MSA. The next week, on
December 29, the court entered a judgment of dissolution incorporating the
MSA (Judgment).
Performance of the Agreement
Shortly after, the collectible items were released to Husband, except for
the John Ford collection (valued by Husband at about $1 million) which was
placed in a new safe deposit box to be used for security under the MSA terms.
Husband continued to live in and hold title to the Rancho Santa Fe home,
and continued to own and operate the businesses.
Husband paid the first installment by check ($100,000).
On September 1, 2015, $600,000 was due under the MSA. On that
date, Husband delivered to Wife’s attorney a $60,000 check and a box of
collectible items. Wife immediately rejected this tender as not complying
with the agreement.
Shortly after, Wife moved for a court order clarifying that the MSA
required the equalization installment payments in cash, not property.
Husband opposed the motion, and alternatively moved to set aside the
Judgment and the MSA based on mistake.
Hearing On Wife’s Motion for Clarification
The parties stipulated that a privately compensated temporary judge,
retired San Diego County Superior Court Commissioner Alan Clements,
would resolve Wife’s motion. (See Cal. Rules of Court, rule 2.831.) After a
three-day evidentiary hearing, Commissioner Clements issued a written
“final” order, determining the MSA’s plain language required payment in
cash, and rejecting Husband’s argument the agreement entitled him to
satisfy his $2.8 million equalization obligation by tendering tangible
property. Commissioner Clements found: “[T]he parties never had an
5
agreement nor understanding between themselves for [Wife] to accept assets
as opposed to cash.”
Commissioner Clements stated, however, he recognized Husband
“present[ed] genuine concerns about his understanding as to how the
payments could be made, and genuine concerns regarding the viability of the
business if the Court requires cash payments and does not allow asset
payments. His concerns are those regarding his mistakes in signing the MSA
without clarification as to how the payment could be made, and are clearly
the subject of his pending motion to set aside the judgment on the MSA based
upon unilateral mistake.” (Italics added.)
Husband appealed Commissioner Clements’s order but the appeal was
dismissed when he did not file an opening brief.
Trial on Husband’s Claimed Unilateral Mistake
Husband’s motion to set aside the Judgment was then heard in
superior court, with Superior Court Judge Gerald Jessop presiding. Although
the parties initially estimated a three-day trial, the trial took nine days and
primarily concerned Husband’s claim that he made a “mistake” in signing the
MSA because he subjectively believed he could satisfy the equalization
payment with “in-kind” property.
At the outset of the hearing, the parties’ counsel discussed the scope of
the issues presented for the court’s resolution. Both counsel agreed
Commissioner Clements had found the equalization payment must be paid in
cash (rather than an in-kind property transfer) and Commissioner Clements’s
order was a “final order” on this issue. Husband’s counsel acknowledged this
determination was binding on Judge Jessop: “There’s no question about that.
[Commissioner Clements] already made [this] finding. [¶] . . . This hearing
before him was clarification of [the MSA’s] language. [Commissioner
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Clements] interpreted a dollar sign before a numeral to mean that it was
cash payment because there wasn’t any other language to be clarified. [¶]
And there’s no question that that’s a final order, and that order cannot be re-
litigated.” (Italics added) Husband’s counsel later repeated: “We’re not
seeking to re-litigate” Commissioner Clements’s order, which Commissioner
Clements “has ruled . . . is final.”
But Husband’s counsel said Commissioner Clements’s order had left
open the issue whether the court should set aside the Judgment based on
Husband’s claimed unilateral mistake because the prior order did not
“address[ ] the issue of mistake.”
The court agreed with these observations, and confirmed its
understanding that the hearing concerned Husband’s claim of unilateral
mistake in believing he could satisfy his obligations with “in-kind” property.
The court said: “The Court will find that [Husband is] collaterally estopped
from claiming or presenting evidence as to what . . . [Commissioner
Clements] has interpreted the language to mean; specifically, that payments
were to be made in cash. However, . . . the issue of [Husband’s claimed]
unilateral mistake has not been litigated; and consequently, [Husband] may
put on evidence regarding his belief of what he was signing at the time.”
The court also made clear that it understood Husband brought his
petition under section 2122, subdivision (e), which permits a family court to
set aside a judgment for a “mutual or unilateral” mistake if the mistake was
“material.” (Italics added.)
During the lengthy trial, Husband testified that when he signed the
MSA he believed he could make the equalization payments by transferring
collectibles to Wife. He said he interpreted the MSA in this way because he
believed the $2.8 million figure in Section 14 represented an “estimated retail
7
value” or “estimated value range” as that was consistent with how the couple
valued collectible items in his businesses. He said his mistake was that he
thought the MSA was dividing the “estimated retail value” range of the
collectibles.
But Husband had considerable difficulty explaining the meaning of the
“estimated” value figures or how they were determined or why he would have
mistakenly reached this conclusion. For example, when asked to describe
how the estimated-retail-value “figure came into existence,” Husband
testified: “That’s a ballpark figure. Roughly what—the estimate range that
we established for the items that we had on a retail basis, between the low
estimate and the high estimate, is approximately, you know, for this type of a
purpose—ballpark amount . . . .” Another time he responded to the question
“what is estimated value range?,” by stating: “It’s my estimate of what I
would hold out should be what somebody might bid on an item with a low
estimate and a high estimate range.” And when asked what he thought the
dollar sign meant in Section 14, he responded that it referred to “value,”
which he said meant: “The estimate ranges or accumulation thereof, of the
items that the community owned.” When asked another time for his
definition of “value” or “estimate range,” he responded: “It’s what I’d love to
get for the item, price-wise.” On another occasion when asked “what does the
estimated retail value mean to you?,” Husband replied: “That is a . . . value
that we would hope to receive on a retail basis, holding out the items to the
world, basically.”
Husband testified he believed his mistake was reasonable and should
require the court to set aside the MSA and Judgment because it would be
“impossible” for him to meet the equalization payment if he was required to
pay in cash. He said, “There simply doesn’t exist enough [collectibles] to turn
8
it into $2.8 million of cash.” He claimed he would not have signed the MSA if
he thought he had to pay in cash. However, when asked if he was permitted
to pay with collectible items, “why would [he] need a 6-year installment
plan,” Husband responded, “I did not.”
Husband additionally said at one point he believed the business
collection was worth approximately $6 million as a “ballpark” amount, but
later testified this was a “fantasy number” of the amount the couple “hoped
the items might be worth.” Husband believed the John Ford collection was
valued at about $1 million, but claimed this was his “personal” collection.
During trial, Wife strenuously challenged the validity of Husband’s
claim that he subjectively believed the couple had agreed he could satisfy the
$2.8 million payment by transferring property reflecting an “estimated retail
value.” She testified she did not recall this term was ever used in the parties’
presettlement correspondence, and said the phase “estimated retail value”
was used in the business to place a value on a consignor’s property “so that
we could insure it.”
Wife said it was clear to her during the mediation that the $2.8 million
equalization payment would be paid in cash. She said that although she
preferred a three-year deadline for the equalization payments, she agreed to
the six-year installment plan “to give [Husband] time to raise the cash.” Wife
testified that she would never have agreed to permit Husband to satisfy his
equalization obligation in assets because (1) “nothing had been valued by an
outside party . . . [and] [w]e had no listings [or] outside evaluation of what
the market value of our collectibles were”; and (2) there were no MSA
provisions ensuring that any transferred property had the value attributed to
it by Husband. Wife further testified she insisted on security in the MSA “in
the event that [Husband] was unable or unwilling to raise the [necessary]
9
cash.” She said the security consisted of the home (which the evidence
showed had about $1.5 in equity) and the John Ford collection which she
believed was worth about $900,000.
Wife also testified that at the time of the mediation, she believed the
community estate was worth approximately $11 million (including the
couple’s business and community personal collectible items). When asked
why she was willing to accept far less than one-half that number as the
equalization, she said “I didn’t want a long, drawn-out divorce. I wanted it to
be over.”
Each of the parties also called various witnesses, including accountants
and an expert on historical collectibles. The parties were precluded from
introducing any evidence of their specific communications during the
mediation. (See Evid. Code, § 1119, subds. (a), (c).)
At the conclusion of the evidence, the court stated it had 35 pages of
typewritten notes and it “intend[ed] to go through all of those notes before I
make [a] decision.” The court then heard counsels’ arguments, and took the
matter under submission.
Court’s Ruling
About 11 days later, the court held a hearing during which it ruled that
Husband did not meet his burden to show the Judgment should be set aside
based on his claimed unilateral mistake. The court orally explained its
reasoning in detail. The substance of this explanation was later incorporated
in a comprehensive statement of decision and a lengthy final order after
hearing.
We summarize the relevant findings here.
First, the court had “serious reservations” about the “credibility” of
Husband’s claim that he did not understand he would be required to pay in
10
cash. The court found Husband never adequately explained the “disconnect”
between the MSA’s unambiguous language requiring a cash payment and his
assertion that the $2.8 million referenced the parties’ intent to divide the
“estimated retail value” of the parties’ collectibles and thus the equalization
payment could be paid in property. The court noted that despite Husband’s
vast business experience, he provided only “disjointed testimony and
evidence” to support his “claim of mistake.” The court also discussed at
length Husband’s testimony about the “estimated value range,” and the
various figures within this range (“low,” “high” and “mid-range”), and
found this evidence to be of questionable relevance as it relates to
“equalization dollars.”
The court also noted that Husband had identified $6 million as the
value of the business collectibles in the parties’ negotiations and in loan
applications, but that Husband later said this figure was a “fantasy.” The
court observed: “[Husband] did not explain why he would have applied an
apparent fantasy number to the EAN’s inventory or his personal collection
[p]articularly if he used that number in applications for credit. [Husband]
was represented by two attorneys during the mediation [his family law
attorney and his business attorney]. . . . EAN’s longtime employee . . . [was]
also present. After the mediation, [Husband] had 18 days between the time
he entered into the terms of the mediated stipulation settling the matter
until he signed the final MSA incorporating the agreement . . . . It stretches
credibility to believe that these professionals were using fantasy numbers in
considering the terms of the MSA.”
After discussing its factual conclusions as to Husband’s mistake
claim, the court described the applicable law. The court said that
Husband’s “reliance upon evidence of subjective intent alone is
11
insufficient,” and cited to several decisions discussing legal principles
requiring an objective (rather than subjective) interpretation of contracts,
including Winet v. Price (1992) 4 Cal.App.4th 1159 and Brant
v. California Dairies, Inc. (1935) 4 Cal.2d 128. The court also said that a
party’s unilateral mistake is generally insufficient to obtain equitable
relief from the contract terms if the other party did not know of or cause
the mistake. The court additionally said a party bears the risk of mistake
if “he has only limited knowledge with respect to the fact to which the
mistake relates but treats his limited knowledge as sufficient.”
On the separate issue of materiality, the court found Husband “did
not satisfy his burden to prove that he would materially benefit if the
Court were to set aside the MSA’s property division provisions,” noting
that Husband “never provided to the Court with even an estimated
opinion of value of the community property collectibles [when the] Parties
entered into the MSA. [¶] . . . [¶] The Court does not know whether
[Husband] is complaining that he ‘paid too much’ or ‘didn’t give himself
enough time to perform’ under the terms of the agreement. To this date,
no one knows the value of the community property estate or the time it
would take to otherwise liquidate the inventory. The court does not know
the relative value of the other issues settled by the MSA and ‘equalized’
by the $2.8 million payable by [Husband] to [Wife].”
Finally, the court rejected Husband’s claim that performance was
impossible, noting that Husband never made any attempt to perform.
The court observed that Husband admitted he could have attempted to
sell two of his “high value” coins for a combined $375,000, but did not do
so because he did not “believe” he could locate a buyer. The court said
that Husband “was very knowledgeable regarding his business and the
12
difficulties regarding sale of collectible assets. The MSA provided for a
pay-out over 6 years apparently in recognition of these difficulties.”
On the impossibility argument, the court also found Husband “could
have sold the John Ford collection assets which were being held as
security for the equalization payment in the [safe deposit box]. [Husband]
indicated that he could have raised approximately $1 million towards the
equalization payment through the sale of those items. [Husband] then
relied upon circular rationale when he testified that the John Ford
collection items became unavailable for sale under the terms of the MSA
when they became security. They became security when he failed to
make the second payment. [Husband’s] excuse for not selling the John
Ford collection in order to pay the equalization installment was his
allegation that the equalization payment was not secured by all items of
the John Ford collection. This does not make sense.”
Representing himself on appeal, Husband challenges the court’s
order denying his section 2122, subdivision (e) set-aside motion.
DISCUSSION
I. Legal Principles and Appellate Review Standards
A party may move to set aside a family court stipulated judgment
on the grounds of “mistake, either mutual or unilateral, whether mistake
of law or mistake of fact” if the motion is “brought within one year” after
judgment is entered. (§ 2122, subd. (e).) “[B]efore granting relief, the
court shall find that the facts alleged as the grounds for relief materially
affected the original outcome and that the moving party would materially
benefit from the granting of the relief.” (§ 2121, subd. (b).) But a
“judgment may not be set aside simply because the court finds that it was
inequitable when made, nor simply because subsequent circumstances
13
caused the division of assets or liabilities to become inequitable . . . .”
(§ 2123.)
Under these provisions, a party moving to set aside a judgment
under section 2122, subdivision (e) based on a mistake has the burden to
show (1) the mistake; and (2) the mistake was material. (See In re
Marriage of Kieturakis (2006) 138 Cal.App.4th 56, 82 (Kieturakis); In re
Marriage of Rosevear (1998) 65 Cal.App.4th 673, 684-685 (Rosevear).) We
review the court’s ruling for abuse of discretion. (In re Marriage of
Brewer & Federici (2001) 93 Cal.App.4th 1334, 1346 (Brewer & Federici).)
In so doing, we consider the court’s factual findings under the substantial
evidence review standard, and the court’s legal conclusions under the de
novo review standard. (See Haraguchi v. Superior Court (2008) 43
Cal.4th 706, 711-712; In re Marriage of Walker (2012) 203 Cal.App.4th
137, 146.)2
In reviewing the court’s factual findings, we “ ‘examine the evidence
in the light most favorable to the prevailing party and give that party the
benefit of every reasonable inference. [Citation.] We accept all evidence
favorable to the prevailing party as true and disregard contrary evidence.
[Citation.]’ [Citation.] ‘We do not reweigh the evidence or reconsider
credibility determinations. [Citation.]’ ” (In re Marriage of Calcaterra &
Badakhsh (2005) 132 Cal.App.4th 28, 34.)
It is a fundamental rule of appellate law that the lower court’s
judgment is presumed to be correct. (Jameson v. Desta (2018) 5 Cal.5th
594, 608-609.) An appellate court “ ‘ “must presume that the record
contains evidence to support every finding of fact . . . .” ’ [Citations.] It is
2 We reject Wife’s argument the substantial evidence standard “does not
apply” if a trier of fact concludes a party has not met his burden of proof.
14
the appellant’s burden . . . to identify and establish deficiencies in the
evidence. [Citation.] This burden is a ‘daunting’ one.” (Huong Que, Inc.
v. Luu (2007) 150 Cal.App.4th 400, 409.)
II. Unilateral Mistake
Under section 2122, subdivision (e), a mutual or unilateral mistake
is sufficient to support a set-aside order, and the mistake can be one of
fact or law. (See Brewer & Federici, supra, 93 Cal.App.4th at pp. 1346-
1348.) The code section does not define a “unilateral” mistake, and the
courts have not specifically determined the precise scope of this term.
(See In re Marriage of Varner (1997) 55 Cal.App.4th 128, 142 [“Less clear
is the meaning and the nature of the ‘mistake’ which permits the setting
aside of a judgment.”].) But we agree with both parties that it is
appropriate to look to contract law standards for guidance on the meaning
of a unilateral mistake under this code section. (See In re Marriage of
Simundza (2004) 121 Cal.App.4th 1513, 1518.)
Under California contract law, to establish a basis for relief on a
unilateral mistake-of-fact theory, a party may be entitled to relief even if
the other party was unaware of the mistake and did not contribute to it.
(Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 280-282 (Donovan).) But to
prevail under these circumstances, the moving party must establish: “(1)
[he] made a mistake regarding a basic assumption upon which [he] made the
contract; (2) the mistake has a material effect upon the agreed exchange of
performances that is adverse to the [mistaken party]; (3) the [mistaken party]
15
does not bear the risk of the mistake; and (4) the effect of the mistake is such
that enforcement of the contract would be unconscionable.”3 (Id. at p. 282.)
Husband argues the court erred because it never identified or
specifically applied these factors, and instead discussed the law applicable
to interpreting a contract (requiring a focus on objective rather than
subjective intent), and stated that “as a general rule” relief for a mistake
generally cannot be granted if the mistake was not “known to nor caused
by the other party.”
There is no showing in the appellate record that Husband’s
attorneys objected to the court’s rulings on this basis. Thus, the
contention is forfeited. (In re Marriage of Arceneaux (1990) 51 Cal.3d
1130, 1132; Avalos v. Perez (2011) 196 Cal.App.4th 773, 776.) But even if
Husband had properly preserved the issue, there was no prejudicial error.
Read in context, the court’s statements were consistent with the elements
identified in Donovan and the required analysis under section 2122,
subdivision (e). Most important, the court found that Husband did not
meet his burden to prove the very first element of the Donovan unilateral-
mistake test, i.e., that he “made a mistake regarding a basic assumption
upon which [he] made the contract.” (Donovan, supra, 26 Cal.4th at p. 282.)
At trial, Husband argued he made a mistake because he believed the
parties had agreed in the MSA he could satisfy his equalization obligation
by transferring property to Wife, rather than paying her cash. The court
3 In identifying different elements of a unilateral-mistake claim, Wife
relies on Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41
Cal.App.4th 1410. This reliance is misplaced. In Donovan, the California
Supreme Court limited Hedging Concepts to a mistake-of-law claim.
(Donovan, supra, 26 Cal.4th at pp. 279-282.) In Donovan, as here, the issue
involved a claimed mistake of fact. Thus, Donovan is controlling, and not
Hedging Concepts.
16
found Husband was not believable on this issue. The court stated it had
“serious reservations” about Husband’s credibility regarding the “in-kind”
payments. The court detailed the weaknesses in Husband’s evidence and
found Husband’s testimony as to his mistake to be disjointed and
confusing. Based on these findings, the court found Husband had not
proved a “unilateral mistake” that could legally support setting aside the
parties’ MSA and the Judgment. Under Donovan and section 2122,
subdivision (e), this finding required the court to deny Husband’s set-
aside motion.
In his appellate briefs, Husband expresses disagreement with the
court’s factual findings. But we are bound by these findings if supported
by substantial evidence (In re Marriage of Ciprari (2019) 32 Cal.App.5th
83, 93-94), and Husband’s challenges to the sufficiency of the evidence are
without merit.
First, Husband cannot prevail because he did not fairly and
accurately summarize all of the evidence presented at the nine-day trial
on the mistake issue. (See Rayii v. Gatica (2013) 218 Cal.App.4th 1402,
1408 (Rayii).) He discussed only the evidence favoring his claims, and
failed to explain why the contrary evidence and inferences from this
evidence did not support the court’s conclusions.
“ ‘ “An appellant challenging the sufficiency of the evidence to
support the judgment must [describe] the evidence in the record
supporting the judgment and explain why such evidence is insufficient as
a matter of law. [Citations.] An appellant who fails to cite and discuss
the evidence supporting the judgment cannot demonstrate that such
evidence is insufficient. . . . Accordingly, a party challenging the
judgment for lack of substantial evidence must ‘ “set forth, discuss, and
17
analyze all the evidence on that point, both favorable and unfavorable.” ’
[Citation.] Unless this is done the error is deemed to be waived.” ’ ”
(Vendor Surveillance Corp. v. Henning (2021) 62 Cal.App.5th 59, 76-77;
see Verrazono v. Gehl Company (2020) 50 Cal.App.5th 636, 652-653.)
Moreover, even if we were to reach the issue on its merits, there is
ample evidence in the record supporting the court’s finding that Husband
did not meet his burden to show he subjectively believed the parties had
agreed he could satisfy his $2.8 million payment obligation with
collectibles in lieu of cash payments.
First, Husband’s claim was inconsistent with the circumstances
leading to the settlement. After the parties were unable to agree on a
proper valuation of their community property (including the value of each
of their hundreds of collectible items), the parties engaged in lengthy
settlement negotiations with an experienced family law mediator.
Husband (an experienced businessperson) was assisted by his business
and family law attorneys and his long-time employee. The parties’
agreement gave Husband most of the community property, and contained
unambiguous language requiring Husband to pay an equalization
payment in dollars. Husband then had 18 days to review the agreement
until he signed the final MSA. As reflected in the trial court’s findings, if
Husband actually believed Wife had agreed he could meet the payment
obligation by transferring property to her, it is reasonable to conclude he
would have insisted on such language in the agreement.
Additionally, the fact the parties agreed Husband would have six
years to satisfy the $2.8 million payment obligation supports that
Husband understood the parties were agreeing to pay in cash. As
Husband acknowledged at trial, such extended payment plan would have
18
been unnecessary if he could satisfy the obligation by transferring
property.
Further, the court had a reasonable basis to consider that the MSA
contained no provisions to value property transferred by Husband to meet
his equalization obligations. The parties expressly agreed in the MSA
that they had not valued their community property, and there was
extended testimony at trial about the difficulty in determining the value
of any particular collectible. Under these circumstances, the court had a
reasonable basis to decline to credit Husband’s claim he actually thought
Wife had agreed or would have agreed to accept whatever items he
unilaterally selected to compensate her for the $2.8 million payment
obligation.
Additionally, the court found Husband’s explanation at trial for his
claimed mistake—that he thought the parties had agreed to divide
“estimated retail value”—undermined the credibility of his mistake claim.
As the court noted, Husband’s testimony on the “estimated retail value”
concept was highly problematic for numerous reasons, including that
Husband could not explain the concept with any clarity; there was no
specific identified value for each item (at most, there was a low, high, and
mid-range “estimated” value); Husband acknowledged the concept
referred only to an amount the parties “hoped” to obtain from selling the
item; Husband admitted the estimated retail value was not equivalent to
fair market value; the parties expressly agreed in the MSA they had not
placed a value on the community property items or determined the extent
of the community estate; and Husband was aware the equalization
payment was not only to compensate for the collectibles but also to
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compensate for the other community property received by him, such as
the Rancho Santa Fe residence.
In challenging the court’s factual conclusions, Husband discusses
his own evidence supporting his unilateral-mistake claim, including that
the MSA did not use the word “cash”; it was undisputed that the couple
owned primarily property rather than cash; the MSA does not specifically
state that Husband will have to sell property to meet his equalization
obligation; the fact that Section 14 stated Husband’s equalization
payments were “ ‘tax-free’ ” under the Internal Revenue Code; and
Husband’s testimony he believes it would have been “impossible” to
transform his collectibles into cash during the six-year period.
In asserting these arguments, Husband is asking us to place greater
weight on his evidence than did the trial court, something we cannot do.
(Gomez v. Smith (2020) 54 Cal.App.5th 1016, 1043-1044.) We cannot
reverse a court’s order merely because there was evidence that could
support a contrary finding. (Ibid.; Norasingh v. Lightbourne (2014) 229
Cal.App.4th 740, 753.) When reviewing an appellate challenge to a
court’s factual finding, we do not determine whether substantial evidence
could have supported a different finding, but only whether substantial
evidence supports the finding the trial court actually made. (Norasingh,
at p. 753; see Rayii, supra, 218 Cal.App.4th at p. 1408.)
Husband alternatively argues the court made a legal error in
denying his motion because the court did not understand a unilateral
mistake alone could support relief under section 2122, subdivision (e).
The record does not support this argument. Judge Jessop, a highly
experienced family law court judge, expressed an understanding
throughout the trial that Husband’s motion was brought under section
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2122, subdivision (e) and that a “unilateral mistake” could serve as a
basis to set aside the judgment if Husband in fact proved the unilateral
mistake. Likewise, we find unavailing Husband’s focus on the court’s
statement that a party’s subjective belief alone is insufficient to show
unilateral mistake. We agree with the court that under the
circumstances here Husband was not entitled to relief if he established
only that he subjectively believed he could satisfy his payment obligations
by transferring property. Rather, the issue was whether Husband
subjectively (but mistakenly) believed that he and Wife had agreed to this
payment plan. We are fully satisfied the court understood these concepts,
and as discussed, had substantial evidence to reject this claim.
Husband additionally argues the court failed to “address” tax issues
and/or allow the admission of evidence on the relevant tax laws.
However, Husband’s record citations do not support this assertion. At
most, he cites to the court’s ruling that he was barred from relitigating
the objective meaning of the MSA. However, this ruling was proper and
was agreed to by Husband’s counsel. (See part IV, post.) Further, this
ruling did not preclude Husband from presenting evidence as to his
claimed unilateral mistake. To the extent Husband believed tax-related
evidence was relevant to the issue of his mistake, he was permitted to
present this evidence at the hearing, and there is no showing he was
precluded from doing so.
Moreover, the court had a reasonable basis to reject Husband’s tax-
related arguments. Husband argues that requiring him to sell the
collectibles and pay Wife in cash was unfair and inconsistent with the
parties’ agreement because this would require him to solely bear any
taxes upon the sale of a collectible (presumably some form of capital gains
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taxes). Husband maintains that the MSA’s provision that his
equalization payments were to be a “tax free interspousal transfer” means
he did not agree to pay the taxes from selling a collectible, and thus he
should have been permitted to transfer in-kind property to satisfy his
equalization obligations.
The court was not required to accept this argument. The MSA’s
tax-free interspousal provision was based on the “applicable provision of
the Internal Revenue Code,” which provides that transfers between
spouses incident to a divorce do not constitute an income tax event, and
therefore there are no income tax consequences to the receiving party for
such transfers. (26 U.S.C. § 1041; see In re Marriage of Bergman (1985)
168 Cal.App.3d 742, 762.) This principle is not necessarily the same as
the issue whether a spouse selling property to fund an equalization-
payment obligation must pay any taxes upon the sale of the property. As
Wife points out, Husband presented no legal authority or evidence, nor
made any attempt to present authority or evidence, as to whether he
would be required to pay taxes and the amount of such taxes (if any) if he
sold his collectibles to pay the required equalization payments to Wife.
His claim in his appellate brief that his tax burden would be $1.7 million
if he was required to “sell pre-existing items to raise cash” is
unsupported, as is his claim that the court would not permit him to
present this evidence.
Although the court could have found that Husband’s understanding
of the MSA’s interspousal-transfer income tax provision reflected his
unilateral mistake that an in-kind transfer was permissible, it was not
required to do so. Based on the MSA terms and the evidence at the
hearing, the court could reasonably conclude that when the parties signed
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the MSA, they understood and intended that Husband, and not Wife,
would bear the costs of selling any asset, including any related taxes
arising from the sale.
III. Materiality
To establish grounds to set aside a judgment under section 2122,
subdivision (e), the party must also show the mistake was material.
(§ 2121, subd. (b); Rosevear, supra, 65 Cal.App.4th at pp. 684-685, &
fn.11.) The party must prove the mistake resulted in a “material
disadvantage” to him. (Rosevear, at p. 685, fn. 11; Kieturakis, supra, 138
Cal.App.4th at p. 89.)
The court found Husband did not meet his burden on this element
because he did not present credible evidence as to the community estate’s
total value. The court said without such evidence, it did not have a
reasonable basis to conclude that if the court set aside the MSA and
Judgment that Husband would receive a greater share of the parties’
community property.
In challenging this finding, Husband argues the record showed that
allowing him to pay “in-kind” would clearly be more advantageous to him
than requiring a cash payment. However, this is not the applicable
standard. It was undisputed at trial that Wife had never in fact agreed to
accept “in-kind” payments. So in determining whether Husband met his
burden on materiality, the court was not required to compare “in-kind”
transfers with “cash” payments. Rather, the court was required to
consider whether Husband would achieve a better result if the MSA was
vacated and the couple was required to start anew to value and then
equally divide all of their community property. The court had a
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reasonable basis to conclude Husband did not meet this burden to
establish he would be in a better position if this were to occur.
IV. Collateral Estoppel
Husband contends the court erred in concluding Commissioner
Clements’s ruling was final for purposes of applying the collateral
estoppel and/or res judicata doctrines. Husband argues that
Commissioner Clements’s order did not have the “the language or finality
of a judgment” to serve as res judicata or collateral estoppel.
This argument is forfeited because Husband’s counsel conceded at
trial that this prior order was a final order and that the parties could not,
and would not, relitigate the issue of the meaning of the MSA.
Husband argues the court erred “by not allowing [him] to develop
the Mistake issues based on the ‘cash’ vs ‘in-kind’ confusion, by simply
brushing it away as res judicata.” The argument is unavailing because
the court did allow Husband to fully develop his unilateral mistake claim
(including by allowing him to testify for six days on this issue) and did not
“brush[ ] it away as res judicata.” Husband cites to the court’s statement
at the end of trial in which the court rejected Husband’s counsel’s request
that it reinterpret the MSA “to allow the $2.8 million equalization
payment owed by [Husband] . . . to be satisfied either in cash and/or in-
kind.” This statement does not reflect the court improperly believed it
could not rule on the mistake issue. Rather, the court was merely
reiterating its earlier ruling (agreed to by both counsel) that it would not
reconsider the issue already resolved by Commissioner Clements
(concerning the objective meaning of the MSA).
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V. Exhibits and Augmentation Request
Husband requests we augment the record with an August 8, 2016
letter to Wife’s counsel from Husband’s trial attorney, and a document
purporting to be a September 7, 2016 email from Commissioner Clements
to the parties’ counsel. We deny this request because there is no
indication these documents were before Judge Jessop in the set-aside
proceedings. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14
Cal.4th 434, 444, fn. 3.) In any event, these documents are not material.
They concern views expressed by Husband’s trial counsel and
Commissioner Clements regarding his prior ruling (after the ruling was
issued). These views have no relevance to the issues before us.
After the appeal was fully briefed, this court noted the parties had
not filed the exhibits cited in their appellate briefs, and gave counsel
additional time to lodge those exhibits. In response, both parties
promptly filed those exhibits. Wife then objected to four of the Husband’s
submitted exhibits, arguing they were never presented to the court below
and/or they are irrelevant. We agree with both grounds, and strike those
exhibits.
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DISPOSITION
Order affirmed. Appellant to bear respondent’s costs on appeal.
HALLER, Acting P. J.
WE CONCUR:
IRION, J.
DATO, J.
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