Rose Safarian v. Harry Govgassian: Property DivisionRose Safarian v. Harry Govgassian: Property DivisionWalzer Melcher LLP
Rose Safarian v. Harry Govgassian (Property Division – Transmutation)
California Court of Appeal, Second District
Published Opinion (2020) 47 Cal.App.5th 1053
Wife and Husband filed an action against defendants and appellants Govgassian et al. for fraud. With the fraud matter ongoing, Wife and Husband divorced and executed a Marital Settlement Agreement. In the MSA, the parties agreed to “maintain his or her separate claims for damages . . . “ and that the “proceeds recovered from these actions will be the separate property of each Party.”
Judgment in the fraud action was entered in favor of Wife and Husband, Govgassian appealed. While the appeal was pending, Husband filed for bankruptcy and was discharged four months prior to the appellate court affirming the fraud judgment. Fraud defendants entered into settlement with bankruptcy trustee, and moved to stay collection proceedings brought by wife in the fraud action. Wife argued that under the MSA her interest in the fraud judgment was her separate property and not part of Husband’s bankruptcy estate. Govgassian argued that the MSA was ambiguous and failed to transmute Wife’s community property interest in the fraud judgment into her separation property pursuant to Family Code section 852.
The trail court determined that there were no “separate claims” by either Wife or Husband in the fraud action and that the language of the MSA was impermissibly vague and unenforceable, and did not transmute any property from community to separate.
Wife appealed and contended that fraud defendants do not have standing to challenge the validity of the MSA. The Court of Appeal agreed and held that a transmutation that fails to meet the requirements of section 852 is voidable, not void, and therefore the parties to the agreement may elect to ratify or void the voidable contract. A third party who is not a successor in interest has no standing to raise the invalidity of a transmutation under section 852.
Opinion: Safarian v. Govgassian 4-21-20
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