Alexander v. Alexander

Opinion

In this case we hold that 1986 amendments to Civil Code section 5125, subdivision (e), have not changed the rule enunciated in In re Marriage of Stevenot (1984) 154 Cal.App.3d 1051 , 1068 [ 202 Cal.Rptr. 116 ], that “After relief is no longer available under Code of Civil Procedure section 473 for mistake, inadvertance, surprise or excusable neglect, an otherwise valid and final judgment may only be set aside if it has been obtained through extrinsic, not intrinsic, fraud.” An inequitable division of community property, by itself, is insufficient to set aside such a judgment and the marital settlement agreement of the parties incorporated therein.

Patrick Alexander appeals from an order setting aside a marital settlement agreement and the property settlement portions of a dissolution judgment. We reverse.

Patrick consulted a divorce manual for nonlawyers and prepared a marital settlement agreement consisting of six individual agreements and an interspousal grant deed. A month after the separation, Carolyn returned to the family home to retrieve some personal belongings. She reviewed the settlement documents with Patrick for approximately 10 minutes, and told Patrick for the first time that she wanted half the equity in the home. He accordingly retyped the individual agreement pertaining to the home. The documents were then executed by the parties before a notary public.

The six agreements provided the following: (1) the current equity in the family home was $53,000, of which Carolyn would receive half upon sale of the property within 12 years, (2) Carolyn had already received $4,000 as partial payment for the equity in the home, (3) Carolyn waived all rights to all savings plans or accounts held jointly with or separately by Patrick, (4) Carolyn waived any interest she held in Patrick’s pension plan, (5) all furnishings, personal property and motor vehicles in the respective parties’ possession would be their separate property, and (6) Carolyn waived all rights to spousal support. The interspousal transfer grant deed conveyed Carolyn’s interest in the family home to Patrick as his separate property.

Patrick then filed a petition for dissolution of marriage. Carolyn defaulted. On August 20, 1986, the court rendered a dissolution judgment incorporating the marital settlement agreement. Neither party had obtained legal counsel.

Fifteen months later, on November 24, 1987, Carolyn, now represented by counsel, filed a motion to set aside the judgment and marital settlement agreement on the ground of extrinsic fraud. She asserted that she had been suffering from severe emotional distress (due to her daughter’s illness with cancer and the breakup of the marriage) when she signed the settlement documents and was not conscious of their nature or seriousness, and had relied on statements by Patrick that she did not need an attorney and they should remain friends.

The court granted the motion and set aside the marital settlement agreement and the property settlement portions of the dissolution judgment. The court found that Carolyn “has not carried her burden of establishing

Patrick correctly contends the court’s express finding of no extrinsic fraud precluded the setting aside of the marital settlement agreement and judgment. This is because Carolyn did not file her motion within the six-month period prescribed by Code of Civil Procedure section 473 (hereafter section 473) for obtaining relief from a judgment due to mistake, inadvertence, surprise or excusable neglect. Once this six-month period elapsed, as we have previously held, the only ground for relief was extrinsic fraud. (In re Marriage of Stevenot, supra, 154 Cal.App.3d at p. 1068.) The court having expressly found Carolyn had failed to establish extrinsic fraud, there was no basis for granting relief, and the court erred in doing so.

The decision upon which the court relied, In re Marriage of Moore, supra, 113 Cal.App.3d 22 , differs from the present case in a fundamental respect. In Moore the motion to set aside the marital settlement agreement was filed before rendition of the dissolution judgment (id. at p. 26), and thus contract defenses such as mistake and unconscionability were applicable. Here, in contrast, the motion was not filed until after the marital settlement agreement was incorporated into a judgment and after the six-month period for relief under section 473. “Marital settlement agreements, once incorporated into a judgment, are no longer mere contracts and a showing of extrinsic fraud is required to set them aside. Thus, they become a hybrid, more like a judgment than a contract, and contract defenses such as mutual mistake are insufficient to set them aside.” (In re Marriage of Stevenot, supra, 154 Cal.App.3d at p. 1071.) Once a marital settlement agreement is incorporated into a judgment and relief is unavailable under section 473, a strong showing of extrinsic fraud is required to set aside the agreement. (Ibid.)

Carolyn insists that notwithstanding the court’s express finding, there had actually been extrinsic fraud, in that Patrick induced her not to retain counsel, concealed the effect of the settlement documents, and concealed an employee stock plan. She is entitled to appellate review on this point for the purpose of determining whether the order was ultimately correct despite the improper grounds asserted by the court. (Code Civ. Proc., § 906.)

The 1986 amendment extended the “confidential relationship” duty of a spouse to act in good faith to the other spouse in the management and control of community property from separation until the property has been divided by the parties or the court. However, the amendment does not affect our disclosure holding in Stevenot. The good faith duty of disclosure remains, while the statutory duty of good faith arising from personal confidence in the management and control of community assets has been extended to the date the court or the parties divide the property instead of the date of separation.

Indeed, it appears from a comparison of our holding in Stevenot with the 1986 amendment to subdivision (e) that the Legislature had our holding in mind in enacting this amendment. The amendment does not change the

Thus, the general rule we established in Stevenot is unaffected by the 1986 amendments to Civil Code section 5125, subdivision (e). “After relief is no longer available under Code of Civil Procedure section 473 for mistake, inadvertance [sic], surprise or excusable neglect, an otherwise valid and final judgment may only be set aside if it has been obtained through extrinsic, not intrinsic, fraud.” (In re Marriage of Stevenot, supra, 154 Cal.App.3d at p. 1068.) The trial court’s finding of no extrinsic fraud was determinative that Carolyn’s motion should have been denied. Extrinsic fraud was required. Once the six-month period prescribed by Code of Civil Procedure section 473 has passed, an inequitable division of the community property, by itself, is insufficient to set aside a marital dissolution judgment and the marital settlement agreement of the parties incorporated therein.

Changing the names, we repeat the final paragraph from Stevenot: “In sum, we conclude that the record does not disclose that [Carolyn] was either deliberately kept in ignorance of the proceeding or fraudulently prevented by [Patrick] from presenting her claims. Any failure was due to her own failure to act diligently. Absent extrinsic fraud, it was error to set aside the default and interlocutory judgment of dissolution of marriage. As Justice Traynor stated, ‘Relief is denied, however, if a party has been given notice of an action and has not been prevented from participating therein. He has had an opportunity to present his case to the court and to protect himself from mistake or from any fraud attempted by his adversary.’ (Kulchar v. Kulchar [1969] 1 Cal.3d [467], 472 [ 82 Cal.Rptr. 489 , 462 P.2d 16 , 39 A.L.R.3d 1368 ].) [Carolyn] had her opportunity and failed to exercise diligence and take advantage of it.” (In re Marriage of Stevenot, supra, 154 Cal.App.3d at pp. 1075-1076, citation omitted.)

Low, P. J., and Haning, J., concurred.