Family Law

Betty and Wayne divorced in 1988.  As part of the divorce judgment Wayne got two pieces of property.  In turn, he owed Betty $335,000.  He gave her a promissory note for the amount due, and secured it with deeds of trust on the two properties.  Eventually sufficient payments were made by Wayne so that Betty released the deed of trust against one of the properties.

Wayne remarried.  Subsequently Wayne and his new wife tried to refinance the one property that Betty still had a deed of trust against.  Betty refused to release her trust deed. which held up the refinance.  Wayne sued Betty for cancellation of the trust deed.  Betty counter-sued Wayne, the title company for the refinance, and the lender for the refinance. The refinance went through while the lawsuits were pending, however Betty was not paid the money that she was owed.

At trial the judge decided that the deed of trust was governed by the Marketable Record Title Act (Cal. Civ. Code Sections 880.020, et seq.); and that under the terms of the Marketable Record Title Act the deed of trust had expired.  Advantage Wayne.  However, the trial judge also ruled that the family law judgment remained in full force and effect, and that Wayne still owed Betty the balance remaining on the original $335,000 equalizing payment.

Under a separate theory of "accord and satisfaction" Wayne also tried to argue that the transactions leading to Betty's earlier release of one of the trust deeds were a rewrite of the terms of the equalization payment, and that it was no longer a part of the underlying judgment.  Wayne loses. 

Finally Wayne tried to argue that once the deed of trust expired under the terms of the Marketable Record Title Act, his obligation to pay the balance of the money owing under the divorce judgment also expired.  Wayne loses.

The trial courts decision was affirmed on all counts by the Appellate Court.

Dealing with accord and satisfaction the Court of Appeals writes:

[Wayne]'s accord and satisfaction argument . . . is contrary to the express language of the modification. It stated that the original note was modified in specific particulars only. As the trial court observed, the modification made no mention of Mr. Schelb?s lump sum payment to Ms. Stein, Ms. Stein?s release of her claim to the Glenoaks property, or the new principal amount due in light of payments made.

?An accord and satisfaction is the substitution of a new agreement for and in satisfaction of a preexisting agreement between the same parties. The usual purpose is to settle a claim at a lesser amount. [Citations.] The elements of an accord and satisfaction are: (1) a bona fide dispute between the parties, (2) the debtor sends a certain sum on the express condition that acceptance of it will constitute full payment, and (3) the creditor so understands the transaction and accepts the sum. [Citations.]? (In re Marriage of Thompson (1996) 41 Cal.App.4th 1049, 1058.)

Next the Appellate Court looks at the Marketable Record Title Act ("MRTA"):

Civil Code section 882.020, subdivision (a), a MRTA provision, states that where the final maturity date is ascertainable, a ?deed of trust, or other instrument that creates a security interest of record in real property to secure a debt? expires 10 years from the final maturity date. In this case, that date was February 1, 1994, the date stated in both the original note and the 1991 modification. It is undisputed that Ms. Stein failed to avail herself of any of the remedies provided in MRTA to extend her secured interest in the Maclay property.

Where a deed of trust or other security interest expires under the MRTA, it is rendered ?unenforceable by any means commenced or asserted thereafter and is equivalent for all purposes to a certificate of satisfaction, reconveyance, release, or other discharge of the security interest, and execution and recording of a certificate of satisfaction, reconveyance, release, or other discharge is not necessary to terminate or evidence the termination of the security interest. . . .? (Civ. Code, § 882.030.) Civil Code section 880.240 lists certain interests which are not subject to expiration under the MRTA; family law judgments are not among them.

So, the deed of trust is done.  Finally, as did the trial judge so too does the Appellate Court come to Betty's rescue on the money she is still owed!  Under Family Code Section 291 Family Law judgments -- including judgments for the payment on non-child/spousal support money -- do not have to be renewed, i.e., they remain in effect until satisfied and do not automatically expire after ten years like most other judgments for the payment of money.  The release of the deed inder MRTA was separate and distinct from the terms of the family law judgment, and had no effect upon it.  The balance owing under the judgment was still enforceable, and Betty was still owed her money. ?Existing law does not provide a time period for enforcement of a non-support money judgment, nor are those judgments exempt from a defense of laches. [Code of Civ. Proc., 683.310.]?

Please click here for the original opinion.

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