CHRISTIANSEN v. CHRISTIANSEN (1988)

OPINION

The parties, Willard and Peggy Christiansen, were married on September 15, 1973.   The parties separated on November 15, 1980, seven years and two months from the date of the marriage.

The parties were granted an interlocutory judgment of dissolution on July 15, 1982, with disposition of their respective marital property claims being reserved for later decision.

The parties executed a marital settlement agreement on December 20, 1982, by which they expressly intended to settle completely and finally all of their rights and obligations arising out of their marriage.

The marital settlement agreement contained the following warranty of disclosure of property:

“Each party warrants to the other that all community and quasi-community property of which either has any knowledge has been disclosed and listed in this Agreement.   Each party further warrants that neither is possessed of any interest in any property not set forth in this Agreement, whether community, quasi-community, tenancy in common, joint tenancy or separate property.

“If it should later be determined that either warrantor now owns any other property, and that the warrantee has an interest in this other property, the warrantor agrees to transfer or pay to the warrantee, (a) the warrantee's interest in it, if it is reasonably susceptible of division, (b) the fair market value of the warrantee's interest on the effective date of this agreement, or (c) the full market value of the warrantee's interest at the time the warrantee discovers the warrantor's ownership of the property.   This agreement is not intended to impair the availability, in a court of competent jurisdiction, of any other remedy arising from the disclosed ownership.”

The agreement further provided that it would be submitted to the court for incorporation by reference and merger into the judgment on the issues reserved under the interlocutory judgment of dissolution.   Pursuant to this provision, the Kern County Superior Court did in fact enter judgment on the reserved marital property issues on January 20, 1983.   The judgment specifically incorporated the agreement by reference and made it a part of the judgment.

On December 13, 1983, appellant filed a complaint in the Kern County Superior Court seeking to enforce the provisions of the marital settlement agreement requiring division of or payment for any previously undisclosed or unlisted marital property.   The principal items of marital property alleged to have been omitted from the agreement were respondent's medical practice and ownership interest in certain medical businesses, including the radiology laboratories, a physical therapy business and other partnership interests.   Appellant also alleged that on September 16, 1983, respondent threatened appellant with physical violence if she pursued her property claims against him and prayed for damages due to the infliction of emotional and physical distress.   Appellant further alleged three causes of action against the attorneys who represented her in the dissolution proceeding for overcharging her, for converting to their own use funds intended for her and malpractice for negligently failing to discover the assets allegedly omitted from the marital settlement agreement.

Respondent answered and cross-complained against appellant for reformation and/or rescission of the marital settlement agreement, relief from the judgment and abuse of process.   Respondent claimed reformation and/or rescission was a suitable remedy in that the value of respondent's medical practice had already been fully considered in arriving at the marital settlement agreement and that it was through a mere “scrivener's error” that the medical practice was unlisted in the agreement.   By way of cross-complaint, respondent sued the attorney who had represented him in the dissolution proceeding on the basis of malpractice and negligently failing to list his medical practice and related business interests in the marital settlement agreement.   Subsequently, respondent filed a first amended cross-complaint in which further claims for indemnity and/or contribution and breach of warranty were stated against respondent's former attorney.

Respondent's cause of action for abuse of process was voluntarily dismissed without prejudice on April 17, 1984.

On July 18, 1985, respondent moved for summary judgment on appellant's claims against him for a further share of his medical practice and related businesses and for the threat of physical abuse.   On October 22, 1985, respondent's motion was granted as to the marital property claim on the basis that the marital settlement agreement had been merged into the judgment and could therefore be enforced only as a judgment and not as a contract.

On May 5, 1986, appellant filed a request for dismissal of her claim for intentional infliction of emotional distress.

On August 21, 1986, appellant moved for reconsideration of the trial court's ruling pursuant to sections 473 and 1008 of the Code of Civil Procedure.¹  The trial court denied the motion to reconsider on September 15, 1986.

On October 3, 1986, judgment was entered in favor of respondent.   Appellant was ordered to take nothing by way of her complaint but the judgment was silent as to respondent's cross-complaint.

Appellant's motion for new trial was denied on December 4, 1986.   Appellant filed a timely notice of appeal.

DISCUSSION

I.***

II. WHETHER THE TRIAL COURT ERRED IN GRANTING THE MOTION FOR SUMMARY JUDGMENT

Summary judgment is proper only if the evidence in support of the moving party would be sufficient to sustain a judgment in his favor and his opponent does not by admissible evidence show facts sufficient to present a triable issue of fact.  (Los Angeles County–U.S.C. Medical Center v. Superior Court (1984) 155 Cal.App.3d 454, 458, 202 Cal.Rptr. 222.)   It is well established that summary judgment cannot be ordered for the moving party, even though the affidavits of the opposing party are insufficient or absent, unless the moving party presents affidavits in support of his motion which comply with section 437c and establish the moving party is entitled to judgment.  (de Echeguren v. de Echeguren (1962) 210 Cal.App.2d 141, 147, 26 Cal.Rptr. 562.)   A defendant, when moving for summary judgment “ ‘must conclusively negate a necessary element of the plaintiff's case or establish a complete defense and thereby demonstrate that under no hypothesis is there a material factual issue which requires the process of a trial.’ ”  (Los Angeles County–U.S.C. Medical Center v. Superior Court, supra, 155 Cal.App.3d at p. 459, 202 Cal.Rptr. 222, quoting from Saatzer v. Smith (1981) 122 Cal.App.3d 512, 517, 176 Cal.Rptr. 68.)   However, in that summary judgment effectively denies the right of an adverse party to a full trial of the case, it should be used with caution.   Any doubts as to the propriety of granting such motion should be resolved against the moving party.  (Blackwell v. Phelps Dodge Corp. (1984) 157 Cal.App.3d 372, 379, 203 Cal.Rptr. 706.)

The trial court granted a motion for summary judgment in the instant case on the basis that the contract action was barred because the marital settlement agreement had been merged into the divorce decree.   The trial court stated:

“The motion for summary judgment in favor of defendant Willard B. Christiansen, M.D. is granted.

“Plaintiff Peggy A. Christiansen ‘agrees and will stipulate that the “Marital Settlement Agreement” is incorporated and merged into the Stipulation for Judgment and Further Judgment Upon Reserved Issues․'  (Page 2, lines 21–24 of plaintiff's Points and Authorities in Opposition to Motion for Summary Judgment.)

“ ‘If ․ a marital settlement agreement merges into the judgment, the agreement is superseded by the decree and can only be enforced as a judgment and not as a contract.’  Lane v. Lane (1985) 165 Cal.App.3d 1143, 1147 [211 Cal.Rptr. 262].  See also Hough v. Hough (1945) 26 Cal.2d 605 [160 P.2d 15].”

Appellant contends the trial court misconstrued the rule enunciated by our Supreme Court in Hough and the Fourth District Court of Appeal in In re Marriage of Lane (incorrectly cited by the trial court as Lane v. Lane ), as applied to the facts of the instant case.   Rather, appellant argues, the instant case is controlled by Henn v. Henn (1980) 26 Cal.3d 323, 161 Cal.Rptr. 502, 605 P.2d 10.   We will conclude the trial court erred and reverse the judgment below granting respondent's motion for summary judgment.

In Hough v. Hough (1945), 26 Cal.2d 605, 160 P.2d 15, the California Supreme Court stated that it is “well settled, that if the agreement is presented to the court in the divorce proceeding for adjudication, and the agreement, or a part thereof, is incorporated in the decree and made a part thereof, the part so incorporated is merged in the decree.   [Citations].”  (Id. at p. 609, 160 P.2d 15.)

“ ‘A decree which incorporates an agreement is a decree of court nevertheless, and as soon as incorporated into the decree the separation agreement is superseded by the decree, and the obligations imposed are not those imposed by contract, but are those imposed by decree, and enforceable as such.   Once the contract is merged into the decree, the value attaching to the separation agreement is only historical.’  (Emphasis added.)   And it should logically and justly follow therefrom that thereafter there is no right of action on the agreement incorporated in the decree.   Generally, an action on a claim for money resulting in a decree in equity, such as a divorce decree, for the payment of money is merged in the decree, and no action thereafter lies upon the claim.   The plaintiff must rely upon the judgment․  When [the agreement] is incorporated in and made an operative part of the decree, there is no longer any occasion for its independent existence.”  (Id. at pp. 609–610, 160 P.2d 15, quoting from Holloway v. Holloway (1935) 130 Ohio St. 214, 198 N.E. 579, 580;  in accord In re Marriage of Jacobs (1982) 128 Cal.App.3d 273, 283, 180 Cal.Rptr. 234;  Zastrow v. Zastrow (1976) 61 Cal.App.3d 710, 713–714, 132 Cal.Rptr. 536.)

In the case of In re Marriage of Lane (1985) 165 Cal.App.3d 1143, 211 Cal.Rptr. 262, the Fourth District Court of Appeal analyzed the foregoing principle in light of a marital settlement agreement that was not expressly incorporated into the judgment but the parties were ordered to comply with all of its provisions.  (Id. at p. 1148, 211 Cal.Rptr. 262.)   In that case, the trial court entered a post-dissolution judgment against a husband in favor of his former wife for his breach of warranty of a provision in their marital settlement agreement that information and data furnished to the wife's counsel, upon which the wife relied in releasing her interest in her husband's corporation, were accurate and current.   The Fourth District Court of Appeal affirmed, stating:

“Here a spouse is suing on a warranty in a marital settlement agreement.   The warranty was not incorporated into the judgment but it was by its very terms a crucial element of wife's ‘consent ․ to convey or release her interest in the ․ parties' largest asset.’

“The effect of finding the marital settlement agreement merged into the judgment would be incongruous.   The warranty would have been in effect from only April 5, 1976 to June 25, 1976.   After that, wife's only remedy would have been for extrinsic fraud, a remedy she already possessed.   The result of a merger is to replace the methods for enforcement of contract provisions with those available pursuant to a judgment, namely execution, levy and contempt.   Enforcement of a warranty provision is not amenable to the latter methods.   Thus, merger would not continue the warranty (merely making it subject to a different enforcement process) but would in fact extinguish it.”  (Id. at p. 1149, 211 Cal.Rptr. 262.)

The Lane court looked to other provisions in the interlocutory judgment to support its conclusion that the parties did not intend a merger.   The Lane settlement agreement contained the language that “neither party is relieved or discharged from any obligation contained in this order or any instrument or document executed pursuant to this dissolution of marriage.”   Thus, the court concluded the parties agreed husband was not released from the warranty contained in the marital settlement agreement.

 In the instant case, appellant's counsel concedes the marital settlement agreement in question was incorporated and merged into the judgment.   Thus, as respondent's argument goes, by reason of the merger of the previously cited warranty provision into the judgment, appellant is precluded from maintaining an independent action for division of previously undisclosed and/or undivided community property assets of the marriage, and is relegated to pursuing such post-judgment relief as may be available to her, i.e., execution, levy and contempt.   In our view, the efficacy of appellant's concession that the parties below, husband and wife, intended that the warranty provision, as opposed to the balance of the marital settlement agreement, merge with and become a part of the judgment is questionable.   As Lane reasons, the warranty provision here, if merged into the judgment, would have been in effect only from December 20, 1982, to June 30, 1983, during which time issues regarding division of primarily community assets were resolved between the parties.   Thereafter, wife's and/or husband's only remedy regarding previously undiscovered and/or undivided community and quasi-community property would have been by post-judgment relief.

On the other hand, it seems logical to assume that any community or quasi-community property assets “picked up” or discovered during the window period the warranty provision was in effect would naturally have been included, and any dispute regarding the character of such property resolved incident to the final agreement for division of property, and resort to the warranty provision would have been unnecessary.   Thus, on its face and particularly when viewed in light of the above scenario, the only reasonable conclusion is that the parties, husband and wife, intended the warranty provision remain a viable and enforceable remedy available to either of them after the judgment was entered in their dissolution action and, thus, intended that the provision, the warranty regarding undisclosed or after-discovered property, not merge into the judgment as did the remainder of the marital settlement agreement.   Therefore, we conclude as a matter of law the warranty provision contained in the parties' marital settlement agreement did not merge into the judgment and the trial court erred in granting respondent's summary judgment motion upon the theory stated.

 We would further find, even assuming arguendo the subject warranty provision did merge into the judgment, that the trial court erred in concluding that the warranty provision contained in the marital settlement agreement “can only be enforced as a judgment and not as a contract.”   In Henn v. Henn, supra, 26 Cal.3d 323, 161 Cal.Rptr. 502, 605 P.2d 10, interlocutory and final decrees of dissolution were entered in 1971 without mention of a fully matured federal military retirement pension that the husband was receiving at that time.   The pension had been partially earned during the marriage, and its existence was known to the wife at the time of the dissolution proceedings, but the pleadings made no mention of the pension.   The husband conceded the court had made no determination with respect to the pension.   Whether a federal military retirement pension could be divided as community property without violating the supremacy clause of the United States Constitution was not definitively decided by the California Supreme Court until 1974.  (In re Marriage of Fithian (1974) 10 Cal.3d 592, 595, 111 Cal.Rptr. 369, 517 P.2d 449.)   In 1976, the wife in Henn filed a complaint seeking division of the pension as community property.

In Henn, the Supreme Court held that the doctrine of res judicata did not bar her claim.   That doctrine operates as a bar, the court observed, “ ‘to the maintenance of a second suit between the same parties on the same cause of action’ ” and it “comes into play in situations involving a second suit, not necessarily between the same parties, which is based upon a different cause of action,” in which case “ ‘[t]he prior judgment is not a complete bar, but it “operates [against the party against whom it was obtained] as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action.” ’ ”  (Henn v. Henn, supra, 26 Cal.3d at pp. 329–330, 161 Cal.Rptr. 502, 605 P.2d 10, fn. omitted.)   Neither aspect of the doctrine was applicable to the original judgment of dissolution and property settlement in that case.  “Since it is conceded that the issue of [the husband's] military pension was not before the court which issued the final decree, the judgment of that court cannot be said to have extinguished Helen's putative interest in that asset.”  (Id. at p. 330, 161 Cal.Rptr. 502, 605 P.2d 10.)

The court also held that the wife's claim was not barred by the doctrine of collateral estoppel:

“[T]he rule prohibiting the raising of any factual or legal contentions which were not actually asserted but which were within the scope of a prior action, ‘does not mean that issues not litigated and determined are binding in a subsequent proceeding on a new cause of action.   Rather, it means that once an issue is litigated and determined, it is binding in a subsequent action notwithstanding that a party may have omitted to raise matters for or against it which if asserted may have produced a different outcome.’   Hence, the doctrine of collateral estoppel is not applicable here because [the husband] failed to demonstrate that [the wife] is relying upon some specific factual or legal contention which would have been irrelevant to the adjudication of the parties' rights to the property distributed in the 1971 decree if it had been raised.”  (Id. at p. 331, 161 Cal.Rptr. 502, 605 P.2d 10, fn. omitted.)

In the instant case, as in Henn, the question concerns alleged unlisted and undivided community property assets.   The trial court concluded, without reaching the issue of whether the subject assets, the medical practice, etc., were or were not listed and/or divided in the marital settlement agreement, that appellant was precluded from maintaining her independent action under the merger doctrine.   In our view, Hough and In re Marriage of Lane, upon which the trial court relied, do not support this conclusion.   Rather, Hough and, inferentially, In re Marriage of Lane, stand for the proposition that where an agreement, such as the one present in the instant case, is incorporated into the decree or judgment, the separation agreement is superseded by the decree and any obligations regarding community property or other assets disposed of in the separation (or, as here, marital settlement) agreement are no longer obligations imposed by contract, but are those imposed by decree and, thus, thereafter are only enforceable by post-judgment remedies.  Hough does not address and does not control post-judgment remedies as to disposition of community property or other marital property assets not disclosed and/or not disposed of in the agreement.   Where, as it is alleged here, the subject property rights were not mentioned in the marital settlement agreement or otherwise in the pleadings, and were left unadjudicated by the decree of divorce, they remained subject to future litigation.   (Bodle v. Bodle (1978) 76 Cal.App.3d 758, 767, 143 Cal.Rptr. 115.)   Such unmentioned community property is held post-dissolution by the parties as tenants-in-common.  (Ibid.;  In re Marriage of Graves (1988) 198 Cal.App.3d 1047, 1049–1050, 244 Cal.Rptr. 110;  In re Marriage of Cobb (1977) 68 Cal.App.3d 855, 860, fn. 1, 137 Cal.Rptr. 670.)   Neither the doctrine of res judicata nor a failure to resolve jurisdiction bars a subsequent action for partition of the missed community asset.  (Henn v. Henn, supra, 26 Cal.3d 323, 329–332, 161 Cal.Rptr. 522, 605 P.2d 10.)   Henn concludes that such claims “may only be adjudicated in a separate action.”  (Id. at p. 332, 161 Cal.Rptr. 522, 605 P.2d 10.)   The recent case of In re Marriage of Graves, supra, based on the reasoning of Henn, reached an identical conclusion, and so must we.

Thus, the trial court erred in granting respondent's motion for summary judgment on appellant's claims against him for a further share of the challenged assets on the basis that the contract action was barred because the marital settlement agreement had been merged into the divorce decree.   The claimed community property rights must be adjudicated in a separate independent action.  (Henn v. Henn, supra, 26 Cal.3d 323, 332, 161 Cal.Rptr. 502, 605 P.2d 10;  Bodle v. Bodle, supra, 76 Cal.App.3d 758, 767, 143 Cal.Rptr. 115.)

The judgment is reversed.   Appellant is awarded her costs on appeal.

FOOTNOTES

1.   All statutory references are to the Code of Civil Procedure unless otherwise indicated.

FOOTNOTE.   See footnote * ante.

MARTIN, Associate Justice.

WOOLPERT, Acting P.J., and ARDAIZ, J., concur.