MoreLaw Receptionists
VOIP Phone and Virtual Receptionist Services

Call 918-582-6422 Today

A married couple filed a fraud action against multiple

defendants. While the fraud action was pending, husband

filed for divorce. Husband and wife entered into a written

marital property agreement that characterized any recovery

in the fraud action as the separate property of each spouse.

Judgment was entered against the defendants in the fraud

action, but husband filed for bankruptcy prior to

enforcement of the judgment. The fraud defendants, aware

of the marital property agreement, entered into a settlement

with the bankruptcy trustee. Next, they moved to stay

collection proceedings brought by wife in the fraud action on

the ground that the entire amount of the judgment was

community property included in husband’s bankruptcy

estate and settled by the bankruptcy trustee. Wife argued

that under the marital property agreement, her interest in

the fraud judgment was her separate property, which was

not part of husband’s bankruptcy estate. Defendants argued

the marital property agreement was ineffective because it

did not meet the transmutation requirements of Family

Code section 852,

1 which precludes extrinsic evidence to

resolve ambiguities. The trial court interpreted the marital

property agreement to have had no effect on the character of

the judgment proceeds. The agreement specifically

identified the fraud action, but it referred to the spouses’

separate claims in the action; in fact, all of the claims in the

fraud action were brought jointly. The trial court found the



1 All further statutory references are to the Family

Code unless otherwise specified.

3

agreement was impermissibly vague, so it failed to

transmute the community property judgment proceeds to

separate property interests. The trial court granted the

protective order.

On appeal, wife contends the fraud defendants do not

have standing to challenge the property agreement based on

the transmutation requirements of section 852. We conclude

a transmutation that does not meet the requirements of

section 852 is voidable, rather than void. Since the

defendants are not parties to the marital property

agreement, they cannot rely on section 852 to invalidate the

agreement. We reverse and remand for further proceedings

to determine the effect of the marital property agreement

under ordinary rules of contract interpretation.

FACTUAL AND PROCEDURAL BACKGROUND

Fraud Trial and Marital Property Agreement

On March 20, 2008, plaintiff and appellant Rose

Safarian (Wife) and her husband Armen Sanamyan

(Husband) filed an action against defendants and appellants

Harry Govgassian and Alisa Agadjanian, as well as against

Elsagav S. Shaham, M.D., Hippocratic Management

Services, Inc., and Silka Enterprises Inc., doing business as

Salud Family Medical Clinic, for fraud and other claims

arising out of an investment in a medical clinic (the fraud

action).

4

Two months later in May 2008, Husband filed a

petition for dissolution of marriage. Wife and Husband

executed a “marital settlement agreement” at the end of July

2008. The express purpose of the agreement was to make a

final and complete settlement of all rights and obligations

between them, including all property rights. Provision 1,

subdivision j, of the agreement stated, “Except as otherwise

expressly provided in this Agreement, each Party, hereby

releases the other from all inter-spousal obligations whether

incurred before or after the effective date, and all claims to

the property of the other. This release extends to all claims

based on the rights that have accrued before the marriage,

including, but not limited to, property and support claims.

Additionally, it is agreed that each Party, while engaged in

joint prosecution, will be entitled to maintain his or her

separate claims for damages pertaining to the alleged fraud

actions pertaining to two litigation matters, in reference to

Ummba Grill Restaurant and Silka Enterprises, Inc.,

(collectively referred to as ‘Govgassian Fraud Cases’). The

proceeds recovered from these actions will be the separate

property of each Party. The parties have considered such

claims in this agreement.”

In addition, provision 10 of the agreement stated, “The

parties acknowledge that they have previously divided all of

their community assets and liabilities as well as their

separate property, between them to their satisfaction. Each

party hereby confirms such division and transfers to the

other as his or her separate property all such property in

5

their personal possession or title, including but not limited to

the items stated in 1(j) above.”

The agreement stated it was valid and enforceable

“upon signing by both parties regardless whether a judgment

for dissolution is entered or not.” The effective date of the

agreement was the date of execution by both parties.

Husband signed the agreement on July 21, 2008, and Wife

signed the agreement on July 22, 2008.

Three years later, on August 20, 2012, judgment was

entered after a jury trial in the fraud action in favor of Wife

and Husband. Hippocratic’s default had been entered. The

jury found the defendants conspired to defraud the plaintiffs,

whose total damages were $460,000 as follows: $240,000 for

loss of investment or loans, $20,000 for Wife’s unpaid wages,

$100,000 for Wife’s noneconomic losses, and $100,000 for

Husband’s noneconomic losses. The jury also found the

defendants liable for punitive damages as follows: $250,000

as against Govgassian, $125,000 as against Agadjanian,

$100,000 as against Shaham, and $25,000 as against Silka.

The judgment ordered recovery of $460,000 to Wife and

Husband from the defendants jointly and severably, an

additional $250,000 from Govgassian, an additional

$125,000 from Agadjanian, an additional $100,000 from

Shaham, and an additional $25,000 from Silka.

Govgassian and Agadjanian filed a notice of appeal, as

did Shaham. But on December 18, 2012, the appeal filed by

Govgassian and Agadjanian was dismissed based on their

default.

6

Bankruptcy Filing

On December 13, 2013, Husband filed a petition for

bankruptcy under Chapter 7 of the Bankruptcy Code. He

expressly stated that it was not a joint case and he was

unmarried. He listed the dissolution proceeding as a

pending action to which he was a party as well as other civil

litigation not relevant here. Husband did not list the fraud

action in his original bankruptcy petition. The record on

appeal does not contain an amended petition, but

Govgassian and Agadjanian have represented in pleadings

in this matter that Husband filed an amended bankruptcy

petition on February 11, 2014, listing the judgment in the

fraud action. The bankruptcy court granted a discharge to

Husband on April 7, 2014.

Four months later, this appellate court affirmed the

judgment against Shaham in the fraud action in an

unpublished opinion. (Safarian v. Shaham (Oct. 9, 2014,

B244709).)

Govgassian and Agadjanian contacted bankruptcy

trustee Howard Ehrenberg to discuss settlement of the

judgment in the fraud action. In early 2016, Ehrenberg

provided notice in the bankruptcy proceedings of a motion to

approve a proposed settlement with the judgment debtors.

In response, the attorney who represented Wife and

Husband in the fraud action expressed concern that the

proposed settlement might compromise Wife’s interest in the

judgment. Ehrenberg did not believe he had settled Wife’s

7

claim and assured the attorney that the judgment debtors

did not include Wife’s interest in the settlement. The

following week, Ehrenberg changed his assessment and

stated he could not confirm that the settlement did not

extend to Wife’s interest, because the judgment was a

community asset included in the bankruptcy estate.

Husband’s bankruptcy attorney provided Ehrenberg with a

copy of the marital property agreement, and Ehrenberg

withdrew his motion to approve the settlement. Ehrenberg

concluded Wife had an interest in the fraud judgment that

was separate from the bankruptcy estate, and he did not

have any authority to compromise Wife’s interest. Separate

mediations were held.

On August 19, 2016, Ehrenberg entered into an

agreement with Govgassian and Agadjanian to accept

payment in settlement of Husband’s rights and interest to

collect on the judgment. The bankruptcy court approved the

settlement of the judgment in November 2016, and

Govgassian and Agadjanian completed payment of the

judgment in May 2017. On July 26, 2017, the bankruptcy

trustee executed a satisfaction of judgment that clearly

stated it was in full satisfaction of Husband’s interest only.

Protective Order to Stay Collection Proceedings

On March 6, 2018, Govgassian and Agadjanian filed a

motion in the fraud action for a protective order staying all

collection proceedings. They argued that even if a marital

8

settlement agreement existed, the causes of action and

recovery in the fraud case were community property as a

matter of law, because no judgment of dissolution or

approval of the agreement dividing the property had been

entered. Community property, including the non-debtor’s

spouse’s share, became part of the bankruptcy estate by law.

As a result, the satisfaction of judgment signed by the

bankruptcy trustee satisfied the entire fraud judgment.

Govgassian and Agadjanian submitted Ehrenberg’s

declaration in support of their motion. Ehrenberg stated

that the fraud judgment was an asset of the bankruptcy

estate, but the bankruptcy court had not ruled on whether

the judgment was community or separate property. On

August 19, 2019, Ehrenberg entered into a settlement

agreement with Govgassian and Agadjanian to accept

payment in full and final settlement of the bankruptcy

debtor’s rights and interest to collect upon the judgment.

Because the payment extinguished the entire asset held by

the bankruptcy estate, Ehrenberg executed a satisfaction of

judgment which states that it is as to Husband’s interest

only. Ehrenberg did not want to prejudice any rights that

Wife might have in the judgment. It was his understanding

that if the judgment were a community asset, the entire

judgment was satisfied by the payment.

Wife opposed the motion for a protective order. She

argued that under her agreement with Husband, she held

her interest in the fraud judgment as her separate property,

9

and therefore, her interest was never part of Husband’s

bankruptcy estate.

She submitted her attorney’s declaration, as well as a

reporter’s transcript of an April 4, 2018 hearing in

bankruptcy court. Ehrenberg testified at the hearing that

the first time Wife’s interest was raised to him was when her

attorney in the fraud action expressed concern on January

20, 2016, about the proposed settlement. The settlement

agreement that Ehrenberg signed with Govgassian and

Agadjanian was solely with respect to Husband’s interest in

the judgment.

Wife also submitted Ehrenberg’s declaration, her own

declaration, the dissolution petition, and the property

agreement. She declared that she had no involvement in the

bankruptcy proceedings.

Govgassian and Agadjanian filed a reply. They argued

the provisions of the property agreement were ambiguous

and failed to transmute Wife’s community property interest

in the fraud judgment into a separate property interest,

citing section 852 for the first time.

With the reply, Govgassian and Agadjanian submitted

the declaration of family law specialist Evan Itzkowitz.

Itzkowitz opined that the terms of the property agreement

were not sufficient to transmute the causes of action and

recovery in the fraud action from community property to the

separate property of Wife and Husband. They also

submitted a copy of the settlement agreement that they

10

entered into with Ehrenberg, and an email exchange

between Ehrenberg and the attorney in the fraud action.

Wife objected to the new evidence filed with the reply.

A hearing was held on June 4, 2018. Itzkowitz argued at the

hearing on behalf of Govgassian and Agadjanian that the

court could not “interpret” the property agreement. Section

852 required an express declaration that the character of the

property was being changed to effect a transmutation, and

no extrinsic evidence was permitted. Itzkowitz insisted the

agreement lacked the type of granting language required to

change the character of the property, such as “I grant it to

you” or “I give it to you.” Wife’s attorney responded that the

language of the agreement was clear, it divided Wife and

Husband’s property, and the parties to the agreement had no

confusion or disagreement over the terms. Itzkowitz replied

that the agreement was vague, because it referred to

separate claims for damages, when there were no separate

claims for damages. Wife’s attorney responded that the

agreement was sufficiently specific to accomplish the

division of property, because it referred to the specific

litigation and the proceeds of any recovery. The trial court

sustained Wife’s objections to the new material submitted

with the reply and took the matter under submission.

Later that day, the trial court granted the motion for a

protective order. The court found there were no separate

claims by either Wife or Husband in the fraud action. All of

the claims in the action were joint, and there was no

separate damages recovery. “Therefore, the language in the

11

Marital Settlement Agreement is impermissibly vague and

unenforceable, thus cannot be considered to have

transmuted any such property from ‘community’ to ‘separate’

property. Accordingly, since there was no separate property

as part of the proceeds of this lawsuit – it was all community

property – the entirety of the judgment against Harry

Govgassian and Alisa Agajanian was satisfied through the

bankruptcy court proceedings.” Wife filed a timely notice of

appeal from the order.

DISCUSSION

Standard of Review

Marital property settlement agreements are favored

under California law (Adams v. Adams (1947) 29 Cal.2d 621,

624), and governed by general contract principles (Tanner v.

Tanner (1997) 57 Cal.App.4th 419, 424).2 “We review the



2 Because we conclude Govgassian and Agadjanian do

not have standing to raise section 852, we need not address

whether the principles that typically apply to interpret a

contract in the absence of extrinsic evidence also apply to

determine the validity of a transmutation under section 852.

These principles include the fundamental goal of contract

interpretation “to give effect to the mutual intention of the

parties.” (Civ. Code, § 1636; Bank of the West v. Superior

Court (1992) 2 Cal.4th 1254, 1264.) In general, we

determine the intent of the parties from the written contract

alone, but may consider the circumstances under which the

12

interpretation of a statute and its application to undisputed

facts de novo. (MacIsaac v. Waste Management Collection &

Recycling, Inc. (2005) 134 Cal.App.4th 1076, 1081–1082.) ‘In

interpreting the statutory language at issue, “[w]e begin

with the fundamental rule that our primary task is to

determine the lawmakers’ intent.” [Citation.] The process of

interpreting the statute to ascertain that intent may involve

up to three steps. [Citations.] As other courts have noted,

the key to statutory interpretation is applying the rules of

statutory construction in their proper sequence. [Citations.]

We have explained this three-step sequence as follows: “we

first look to the plain meaning of the statutory language,

then to its legislative history and finally to the

reasonableness of a proposed construction.” [Citation.]’ (Id.

at p. 1082.)” (In re Marriage of Bonvino (2015) 241

Cal.App.4th 1411, 1422.)



contract was made and its subject matter. (Civ. Code,

§§ 1639, 1647; Hess v. Ford Motor Co. (2002) 27 Cal.4th 516,

524 (Hess).) We interpret the provisions within the context

of the contract as a whole, not in isolation, with the aim of

giving effect to every provision, rather than assigning a

meaning that makes it inoperative, inequitable, or absurd.

(Civ. Code, §§ 1641, 1643; Camacho v. Target Corp. (2018) 24

Cal.App.5th 291, 306.) For a contract to be ambiguous, the

language must be reasonably susceptible of more than one

construction. (In re Marriage of Begian & Sarajian (2018)

31 Cal.App.5th 506, 512.)

13

Statutory Scheme Governing Transmutations

To determine whether third parties have the power to

invalidate marital property agreements that fail to meet the

requirements of section 852, we must review the statutory

scheme governing transmutations. The property rights

provided to spouses by statute may be altered through a

marital property agreement. (§ 1500; Litke O'Farrell, LLC v.

Tipton (2012) 204 Cal.App.4th 1178, 1183.) Married people

can transmute community property to separate and separate

property to community by agreement or transfer. (§ 850,

subds. (a) & (b).)3

Under section 852, a transmutation “is not valid unless

made in writing by an express declaration that is made,

joined in, consented to, or accepted by the spouse whose

interest in the property is adversely affected.” (§ 852, subd.

(a).)4 The writing must contain an “express declaration” that



3 Section 850 provides: “Subject to Sections 851 to 853,

inclusive, married persons may by agreement or transfer,

with or without consideration, do any of the following: [¶]

(a) Transmute community property to separate property of

either spouse. [¶] (b) Transmute separate property of either

spouse to community property. [¶] (c) Transmute separate

property of one spouse to separate property of the other

spouse.”

4 Section 852 provides in full: “(a) A transmutation of

real or personal property is not valid unless made in writing

by an express declaration that is made, joined in, consented

14

“expressly states that the characterization or ownership of

the property is being changed.” (Estate of MacDonald (1990)

51 Cal.3d 262, 272 (MacDonald); In re Marriage of Benson

(2005) 36 Cal.4th 1096, 1100 (Benson).) Specific

terminology, such as “transmutation,” “community property”

or “separate property,” is not required, but “the writing must

reflect a transmutation on its face, and must eliminate the

need to consider other evidence in divining this intent.”

(Benson, supra, 36 Cal.4th at p. 1106.)

Prior to the enactment of section 852, spouses could

easily transmute property, including through oral

statements or implications from conduct. (MacDonald,



to, or accepted by the spouse whose interest in the property

is adversely affected. [¶] (b) A transmutation of real

property is not effective as to third parties without notice

thereof unless recorded. [¶] (c) This section does not apply

to a gift between the spouses of clothing, wearing apparel,

jewelry, or other tangible articles of a personal nature that is

used solely or principally by the spouse to whom the gift is

made and that is not substantial in value taking into

account the circumstances of the marriage. [¶] (d) Nothing

in this section affects the law governing characterization of

property in which separate property and community

property are commingled or otherwise combined. [¶] (e)

This section does not apply to or affect a transmutation of

property made before January 1, 1985, and the law that

would otherwise be applicable to that transmutation shall

continue to apply.”

15

supra, 51 Cal.3d at pp. 268–269.)5 The California Law

Revision Commission (the Commission) reported to the

Legislature that “California law permits an oral

transmutation or transfer of property between the spouses

notwithstanding the statute of frauds. The rule recognizes

the convenience and practical informality of interspousal

transfers. However, the rule of easy transmutation has also

generated extensive litigation in dissolution proceedings. It

encourages a spouse, after the marriage has ended, to

transform a passing comment into an ‘agreement’ or even to

commit perjury by manufacturing an oral or implied

transmutation. [¶] The convenience and practice of

informality recognized by the rule permitting oral

transmutations must be balanced against the danger of

fraud and increased litigation caused by it. The public

expects there to be formality and written documentation of

real property transactions, just as it expects there to be



5 “MacDonald, supra, 51 Cal.3d 262, addressed former

Civil Code section 5110.730. (Added by Stats. 1984, ch.

1733, § 3, p. 6302.) After MacDonald was decided, and as

part of a comprehensive reorganization of the law, the

Legislature repealed former Civil Code section 5110.730

(Stats. 1992, ch. 162, § 3, p. 464), and replaced it with

Family Code section 852. (Stats. 1992, ch. 162, § 10, p. 492,

operative Jan. 1, 1994.) Both versions contain the same

language. We will refer solely to section 852, even when

discussing its predecessor under MacDonald.” (Benson,

supra, 36 Cal.4th at pp. 1104–1105, fn. 4.) As in Benson,

references to section 852 include its predecessor.

16

formality in dealings with personal property involving

documentary evidence of title, such as automobiles, bank

accounts, and shares of stock. Most people would find an

oral transfer of such property, even between spouses, to be

suspect and probably fraudulent, either as to creditors or

between each other. [¶] California law should continue to

recognize informal transmutations for certain personal

property gifts between the spouses, but should require a

writing for the transmutation of real property or other

personal property.” (Recommendation Relating to Marital

Property Presumptions and Transmutations (Nov. 1983) 17

Cal. Law Revision Com. Rep. (1984) pp. 213–214, fns.

omitted (Commission Report).)

The Legislature enacted the writing requirement of

section 852 to prevent transmutations based on easily

manipulated and unreliable evidence. (MacDonald, supra,

51 Cal.3d at p. 269; Benson, supra, 36 Cal.4th at p. 1106.)

The Legislature sought to increase certainty that a

transmutation occurred, discourage perjury in marital

property disputes, and reduce litigation to resolve such

matters. (Benson, supra, 36 Cal.4th at p. 1100.) Extrinsic

evidence is not admissible to prove a writing effected a

transmutation. (Ibid.) The Legislature intended “to create a

writing requirement which enables courts to validate

transmutations without resort to extrinsic evidence and,

thus, without encouraging perjury and the proliferation of

litigation.” (MacDonald, supra, 51 Cal.3d at p. 272.)

17

The Commission’s comment to the statutory text

explained that “[Section 852] imposes formalities on

interspousal transmutations for the purpose of increasing

certainty in the determination whether a transmutation has

in fact occurred. [Section 852] makes clear that the ordinary

rules and formalities applicable to real property transfers

apply also to transmutations of real property between the

spouses. See Civ. Code §§ 1091 and 1624 (statute of frauds),

1213–1217 (effect of recording). This overrules existing case

law. See, e.g., Woods v. Security First Nat’l Bank, 46 Cal.2d

697, 701, 299 P.2d 657, 659 (1956). [Section 852] also

overrules existing law that permits oral transmutation of

personal property; however, transmutation by gift of certain

personal property is recognized.” (Commission Report,

supra, at pp. 224–225.)

Standing to Raise Section 852

Wife contends Govgassian and Agadjanian do not have

standing to challenge the validity of the marital property

agreement under section 852.6 We agree.



6 Although Wife did not specifically raise the issue of

standing in the trial court, both parties agree this court has

discretion to consider this threshold issue on appeal. (In re

Marriage of Oliverez (2019) 33 Cal.App.5th 298, 316, citing

San Mateo Union High School Dist. v. County of San Mateo

(2013) 213 Cal.App.4th 418, 436 [“‘even where a legal

argument was not raised in the trial court, we have

discretion to consider it when the theory raised for the first

18

A. Third Party Standing Depends on Whether a

Defective Transmutation is Void or Merely

Voidable

“In general, California law does not give a party

personal standing to assert rights or interests belonging

solely to others. (See Code Civ. Proc., § 367 [action must be

brought by or on behalf of the real party in interest];

Jasmine Networks, Inc. v. Superior Court (2009) 180

Cal.App.4th 980, 992.)” (Yvanova v. New Century Mortgage

Corp. (2016) 62 Cal.4th 919, 936, fn. omitted (Yvanova).)

Whether a third party can invalidate a transmutation

agreement that fails to meet the requirements of section 852

depends whether the defective agreement is void or simply

voidable.

“A void contract is without legal effect. (Rest.2d

Contracts, § 7, com. a, p. 20.) ‘It binds no one and is a mere

nullity.’ (Little v. CFS Service Corp. (1987) 188 Cal.App.3d

1354, 1362.) ‘Such a contract has no existence whatever. It

has no legal entity for any purpose and neither action nor

inaction of a party to it can validate it . . . .’ (Colby v. Title

Ins. and Trust Co. (1911) 160 Cal. 632, 644.)” (Yvanova,

supra, 62 Cal.4th at p. 929.)

“A voidable transaction, in contrast, ‘is one where one

or more parties have the power, by a manifestation of

election to do so, to avoid the legal relations created by the



time on appeal is a pure question of law applied to

undisputed facts.’”].)

19

contract, or by ratification of the contract to extinguish the

power of avoidance.’ (Rest.2d Contracts, § 7, p. 20.) It may

be declared void but is not void in itself. (Little v. CFS

Service Corp., supra, 188 Cal.App.3d at p. 1358.) Despite its

defects, a voidable transaction, unlike a void one, is subject

to ratification by the parties. (Rest.2d Contracts, § 7;

Aronoff v. Albanese (N.Y.App.Div. 1982) 85 A.D.2d 3.)”

(Yvanova, supra, 62 Cal.4th at p. 930.)

Only the contracting parties have the power to ratify or

avoid a voidable agreement; “the transaction is not void

unless and until one of the parties takes steps to make it so.”

(Yvanova, supra, 62 Cal.4th at p. 936 [discussing void and

voidable assignments].) A litigant who alleges an agreement

is void, however, is not enforcing the terms, but instead

asserting that the agreement is void ab initio. (Ibid.)

“Unlike a voidable transaction, a void one cannot be ratified

or validated by the parties to it even if they so desire. (Colby

v. Title Ins. and Trust Co., supra, 160 Cal. at p. 644; Aronoff

v. Albanese, supra, 446 N.Y.S.2d at p. 370.)” (Yvanova,

supra, 62 Cal.4th at p. 936.)

B. The Statutory Language of Section 852

Supports an Interpretation that Defective

Transmutations are Voidable, not Void

Section 852 provides that a transmutation is “not

valid” unless made in a writing meeting the statutory

20

requirements. We must determine the meaning of the

phrase “not valid” within the context of section 852.

“Not valid” does not necessarily mean “void.” (See

Guthman v. Moss (1984) 150 Cal.App.3d 501, 507–508

(Guthman) [statute providing that liquidated damages

provisions are “invalid” unless separately signed by the

parties interpreted to mean that provisions failing to meet

statutory requirements are voidable at the buyer’s option,

not void].) “Where a word of common usage has more than

one meaning, the court should adopt the one which will best

attain the purposes of the Legislature, keeping in mind the

objectives sought to be achieved as well as the evil to be

prevented.” (Id. at p. 507.)

“Unless a statute expressly deprives the parties of their

right to sue on a contract made in violation of that statute,

the right to recover on the contract will not be denied, if

denial of recovery would be out of proportion to the demands

of public policy. (6 Williston (4th ed. 1995) Illegal

Agreements, § 12:4, pp. 47–51.) ‘Thus, unless no other

conclusion is possible from the words of a statute, it should

not be held to make agreements contravening it totally void.’

(Ibid.)” (Residential Capital v. Cal-Western Reconveyance

Corp. (2003) 108 Cal.App.4th 807, 814–815.)

Section 852 does not expressly provide that a defective

transmutation is “void.” Section 852 is a “statute of frauds”

for the property transmutations of married people. (Sterling

v. Taylor (2007) 40 Cal.4th 757, 766, fn. 5.) Nothing in the

statute or the legislative history suggests that spouses

21

cannot affirm or ratify a defective transmutation agreement

through a subsequent valid agreement. A marital property

agreement that does not contain an express declaration of

transmutation is not void, illegal, or inherently wrong

because it fails to comply with the requirements of section

852. Section 852 establishes a rule of evidence, similar to

the statute of frauds. We conclude a transmutation that

fails to meet the requirements of section 852 is voidable, not

void. A spouse may elect to invoke the protection of the

statute or affirm the property agreement, but a stranger to

the agreement does not have standing to claim the spouses

will not abide by their agreement regardless of the defect. A

third party who is not a successor in interest to the rights of

one of the parties to the agreement cannot raise the

invalidity of a transmutation under section 852.

C. Contracts Violating Similar Statutes of

Frauds are Voidable

Our interpretation of the phrase “not valid” in section

852 is supported by case law interpreting the term “invalid”

in similar statutes. “‘The meaning of the language of the

statute can appear either on [its face] or from any

“established . . . common law meaning.” [Citation.]’ (People

v. Mirmirani (1981) 30 Cal.3d 375, 384, per Bird, C. J., with

two justices concurring and one justice specially

concurring.)” (Guthman, supra, 150 Cal.App.3d at p. 509.)

22

Contracts that violate similar statutes have been held to be

voidable, rather than void.

California’s statute of frauds, Civil Code section 1624,

subdivision (a) provides, “The following contracts are invalid,

unless they, or some note or memorandum thereof, are in

writing and subscribed by the party to be charged . . . .” It is

well established under California law that “a contract falling

within the operation of the statute, but made in

contravention thereof, is not invalid in the sense that it is

void. It is merely voidable.” (O’Brien v. O’Brien (1925) 197

Cal. 577, 586; see also Ayoob v. Ayoob (1946) 74 Cal.App.2d

236, 242 (Ayoob).) “‘Such a contract, if otherwise valid,

remains so, and the sole effect of the statute is to render it

unenforceable by one party against the will of the other who

abandons or repudiates it.’ [Citations.]” (O’Brien, supra, at

p. 586.)

“Similarly, in Estate of Reardon (1966) 243 Cal.App.2d

221, 229, the court held: ‘The word[ ] . . . “invalid,” when

appearing in statutes which are not for the benefit of the

public at large, [is] regarded as equivalent to “voidable”

where none other than a particular person or class of

persons is the object of the statutory protection.’ Thus, the

idea that invalid may mean voidable only is not novel to

California law. And, when legislation has been applied in

judicial decisions and then a subsequent statute on an

analogous subject employs identical language, it is presumed

that the Legislature intended the language be given a like

interpretation in applying the new enactment. (Nishikawa

23

Farms, Inc. v. Mahony (1977) 66 Cal.App.3d 781, 787.)”

(Guthman, supra, 150 Cal. App. 3d at p. 509.)

A transferee or successor in interest to the rights of the

contracting party, such as the party’s grantee, heir, or

personal representative, can take advantage of the statute of

frauds in the same manner as the contracting party could

have. (O’Banion v. Paradiso (1964) 61 Cal.2d 559, 562

(O’Banion).) “There are no similar policies involved where

the third person seeking to raise the statute is not in privity

with a party to the contract. If such persons were able to

assert the statute to invalidate a contract, they could

invalidate contracts which the parties themselves were in

favor of enforcing.” (O’Banion, supra, 61 Cal.2d at p. 563;

see also Wood Estate Co. v. Chanslor (1930) 209 Cal. 241,

250–251; Bumb v. Bennett (1958) 51 Cal.2d 294, 302.)

The California Supreme Court’s decision in Benson

does not alter our conclusion that a marital property

agreement in violation of Section 852 is merely voidable.

The Benson court found that the Legislature did not intend

to incorporate traditional exceptions to the general statute of

frauds, such as part performance, as a substitute for Section

852’s requirement of an express written statement. (Benson,

supra, 36 Cal.4th at pp. 1100, 1109.) “By insisting upon a

special writing expressly changing the character of the

disputed property, MacDonald all but decided the section

852(a) is not satisfied where no such writing exists at all.”

(Id. at p. 1100.) However, the court’s holding that section

852 is not satisfied by anything less than an express

24

declaration in writing does not preclude the statute from

allowing parties to affirm or ratify a defective transmutation

through a subsequent agreement that meets the writing

requirements of the statute.

Contracts violating a similar writing requirement

enacted for the protection of spouses in section 1102,

formerly Civil Code section 5127, have been interpreted to be

voidable, rather than void. Under section 1102, an

instrument selling, conveying, encumbering, or leasing

community property for more than one year must be

executed by both spouses. (§ 1102, subd. (a).) An

instrument that falls within section 1102 which is not signed

by both spouses is not void, however, but merely voidable.

(Clar v. Cacciola (1987) 193 Cal.App.3d 1032, 1036–1037.) A

stranger to the agreement has no standing to challenge its

validity on the ground that it was not signed by both spouses

in accordance with section 1102. (Id. at p. 1037.) “[Section

1102] was designed to protect a spouse from the

unauthorized alienation or encumbering of marital property

by the other spouse; it has never been interpreted in such a

way as to provide a means whereby a third party creditor of

the married couple may challenge and void instruments

signed by only one of the spouses.” (Ibid.)

We note the Law Revision Commission studying

transmutations reported that “[m]ost people would find an

oral transfer of such property, even between spouses, to be

suspect and probably fraudulent, either as to creditors or

between each other.” (Recommendation Relating to Marital

25

Property Presumptions and Transmutations (Nov. 1983) 17

Cal. Law Revision Com. Rep. (1984) p. 214.) Two provisions

were enacted as part of the statutory scheme governing

transmutations to specifically protect the rights of creditors

and third parties. Section 851, former Civil Code section

5110.720, states that transmutations are subject to the laws

governing fraudulent transfers. (§ 851.) Subdivision (b) of

section 852 provides that a transmutation of real property is

not effective as to third parties without notice unless the

transmutation is recorded. Neither of these provisions

enacted to protect the rights of creditors and third parties

apply in this case.

Govgassian and Agadjanian cannot invalidate the

marital property agreement under section 852. To the

extent the terms of the marital property agreement are

ambiguous, the intent of the parties should be determined on

remand in accordance with ordinary principles of contract

interpretation.

The post-judgment order granting a protective order is

reversed and remanded for further proceedings. Appellant

Rose Safarian is awarded her costs on appeal.