In re Marriage of Valli 5/18/11 CA2/5

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: B222435

Case Date: 08/24/2011

Preview:Filed 5/18/11

CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FIVE

In re Marriage of FRANKIE and RANDY VALLI.

B222435 (Los Angeles County Super. Ct. No. BD414038)

FRANKIE VALLI, Petitioner and Respondent, v. RANDY VALLI, Respondent and Appellant.

APPEAL from a judgment of the Superior Court of Los Angeles County, Mark Juhas, Judge. Reversed and remanded. Jaffe and Clemens, William S. Ryden, Nancy Braden-Parker for Respondent and Appellant. Walzer & Melcher, Christopher C. Melcher; Garrett C. Dailey for Petitioner and Respondent.

INTRODUCTION Respondent and appellant Randy Valli (Randy) appeals from the trial court`s order in the parties` martial dissolution proceeding awarding petitioner and respondent Frankie Valli (Frankie)1 a $3.75 million insurance policy on Frankie`s life issued by Manulife during their marriage,2 with Randy as the owner and beneficiary. We hold that under the circumstances of this case, the policy listing Randy as the policy owner when taken out by Frankie and Randy is Randy`s separate property under the form of title3 presumption.

BACKGROUND In 1984, Frankie and Randy were married. Frankie and Randy separated some 20 years later on September 23, 2004, and Frankie filed a petition for dissolution of marriage the next day. At the time Frankie filed the petition for dissolution of marriage, he and Randy had three minor children together.4 In March 2003, Frankie acquired a $3.75 million insurance policy on his life (the policy).5 Randy testified that she and Frankie had discussed acquiring such life insurance when Frankie was in the hospital with heart problems. The purpose of the policy was [t]o prepare for [Randy`s] future in case something did happen to Frankie. Frankie testified that he obtained the policy because he had been experiencing medical problems and wanted to make sure that he took care of his family. Frankie desired that his children

1

As is customary in family law cases, we refer to the parties by their first names for purposes of clarity and not out of disrespect. (Kuehn v. Kuehn (2000) 85 Cal.App.4th 824, 828, fn. 2.)
2

The John Hancock Life Insurance Company subsequently took over Manulife. In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 344.

3 4

One child is now an adult, and the two remaining children will reach adulthood in June 2012.
5

The policy is referred to as a blended universal life contract. 2

be able to go to college and that there would be money for everybody. When he obtained the policy, Frankie did not have plans to separate from Randy. Dennis Gilbert, a life insurance agent, testified that his company sold the policy to the Vallis. According to Gilbert, Randy is the owner and beneficiary of the policy. Randy testified that Frankie and Barry Siegel, Frankie`s business manager, told her that they were going to make [her] the owner, and that she understood that she would be the beneficiary. Frankie testified that he put everything in Randy`s name, figuring she would take care and give to the kids what they might have coming. As of September 12, 2008--during the trial--the cash value of the policy was $365,032. Siegel provided business management and personal services for Frankie, including paying Frankie`s bills. During the Vallis` marriage, Siegel also had a business relationship with Randy, which relationship ended on the Vallis` separation. Siegel`s office facilitated payment of the policy`s premiums for the Vallis. During the Vallis` marriage, the premiums were paid out of a joint account. The parties agree that the funds used to pay the premiums--at least prior to their separation, were community property. 6 The trial court found that the policy is community property. The bases for the trial court`s finding were that the policy was acquired during marriage and the policy`s premiums were paid during marriage. Randy`s argument that she should be awarded the policy because she, and not Frankie, is the policyholder was rejected by the trial court, apparently on the grounds that Randy had not requested a finding on transmutation and there was no evidence of a transmutation. The trial court awarded the policy to Frankie on the condition that he pay Randy $182,500 for her one-half community property interest in the policy because the policy was on Frankie`s life and there was no showing that such an award would prejudice Randy.

6

Frankie presented evidence that after the parties separated, he paid the policy`s premiums then due. 3

DISCUSSION The Trial Court Erred When It Determined That The Policy Is Community Property Randy contends that the trial court erred in finding that the policy is community property and not her separate property. Randy contends that the policy is her separate property under the form of title presumption because she was listed as the policy`s owner when the policy was taken out.

A.

Standard of Review

Generally, we review for substantial evidence the factual findings that underpin a trial court`s determination of whether property is community or separate property. (In re Marriage of Rossin (2009) 172 Cal.App.4th 725, 734.) When, however, the determination requires a critical consideration, in a factual context, of legal principles and their underlying values,` the determination in question amounts to the resolution of a mixed question of law and fact that is predominantly one of law. [Citations.] As such, it is examined de novo. [Citation.] (In re Marriage of Lehman (1998) 18 Cal.4th 169, 184.)

B.

Application of Relevant Principles

Absent an agreement by the parties, Family Code section 25507 imposes on the trial court in marital dissolution proceedings a mandatory, nondelegable duty to value and divide equally the parties` community property estate.8 (See In re Marriage of Cream (1993) 13 Cal.App.4th 81, 89; In re Marriage of Knickerbocker (1974) 43 Cal.App.3d 1039, 1044; see also In re Marriage of Walrath (1998) 17 Cal.4th 907, 924.) To do so,
7 8

All statutory citations are to Family Code unless otherwise noted.

Section 2550 provides in relevant part, Except upon the written agreement of the parties, or on oral stipulation of the parties in open court, or as otherwise provided in this division, in a proceeding for dissolution of marriage or for legal separation of the parties, the court shall . . . divide the community estate of the parties equally. 4

the trial court must first determine which property owned by the parties is part of the community property estate--that is, the trial court must characterize the property. Characterization of property, for the purpose of community property law, refers to the process of classifying property as separate, community, or quasi-community. Characterization must take place in order to determine the rights and liabilities of the parties with respect to a particular asset or obligation and is an integral part of the division of property on marital dissolution. [

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