SUPERIOR COURT DEBORAH KOONS GARCIA and DAVID M. HELLMAN, Co-Executors of the Estate of JEROME J. GARCIA,
Decedent, Petitioners, CAROLYN ADAMS GARCIA, Respondent.
Respondent Carolyn Garcia was represented by David C. Phillips, David M. Given and Barbara A. Rohan.
STATEMENT OF DECISION
A status only judgment of dissolution of marriage having been previously issued by the Court, the trial of the remaining issues took place in Department Four of this Court
before the Honorable Michael B. Dufficy, commencing on December 10, 1996.
Following the conclusion of the trial, on January 15, 1997 the Court filed an intended Decision (Tentative
Decision). The Court now issues a Statement of Decision.
Jerome J. Garcia (hereinafter known as "Jerry") and Carolyn first met and began their relationship in the dope-filled flower child
era in the Haight-Ashbury district of San Francisco in the 1960s. Jerry was an aspiring musician and Carolyn was a member of his entourage with the euphemistic nickname of "Mountain Girl." By the
time he died on August 9, 1995, Jerry was an internationally known popular music performer, individually and as a member of the group known as THE GRATEFUL DEAD. At the time of his death Jerry had a substantial
estate with a value in the millions.
Jerry and Carolyn had two children: Annebelle, born in 1970, and Theresa, born in 1974. Jerry and Carolyn married on December 31, 1981 and separated on
January 6, 1990. The marriage was valid, and Petitioners are estopped to attack its validity because, among other reasons, Jerry filed a verified petition for dissolution of marriage stating the dates of marriage
and separation; requested and obtained a judgment of dissolution of marriage as to status only, in which he again verified the truth of the facts set forth in the petition, including the fact of his marriage; and never
appealed the status judgment.
Following separation both Jerry and Carolyn retained counsel regarding their marital dissolution. Jerry retained Bruce Stilson and Carolyn retained Barbara Rohan (later,
in 1992, David C. Phillips became associated with Ms. Rohan).
Following separation and before any petition for dissolution of marriage was filed, Jerry agreed to pay Carolyn family support. The agreement
for family support was formalized twice in writing, once in April 1990, and again in June 1992, with the amount set at $24,000 per month.
Despite the fact that the parties separated on January 6, 1990, a
petition for dissolution of marriage was not filed until June 2, 1993, when Jerry filed as Petitioner. The events which gave rise to the trial herein occurred in May of 1993, less than one month prior to the
filing of the Petition for Dissolution.
After their 1990 separation and retention of counsel, Jerry and Carolyn began a discussion of dividing their marital property. They informally divided their personal
property, including bank accounts, automobiles, personal possessions, and real property. From time to time Carolyn was requested by Jerry or his representatives to sign quitclaim deeds for real estate, and she did so.
By the spring of 1993, however, the negotiations between counsel to the parties were moving slowly and substantial issues still needed to be resolved, including the issues of spousal support; division of
remaining community and separate property interests, including Grateful Dead Production, Grateful Dead Merchandising, ice9 Publishing, and Consensus Reality, Inc.; and the potential issue of the value of Jerry's
celebrity or goodwill.
Jerry and Carolyn wished to have the matter settled and concluded, and to remain friends. On May 3, 1993, at Jerry's invitation, Jerry and Carolyn met at the offices of David
Hellman (an attorney, CPA, and tax advisor), who was well acquainted with Jerry and Carolyn. Mr. Hellman simply provided a place for Jerry and Carolyn to meet. Jerry and Carolyn agreed that their family law
counsel would not be present.
At the May 3, 1993 meeting, Jerry and Carolyn agreed that they would meet about a week later at which time Carolyn would give to Jerry an offer of settlement of the remaining
property and support issues. Again the meeting was to be without attorneys.
The parties met for a second time on May 11, 1993. Prior to this meeting Carolyn prepared two proposals and brought
them with her to the meeting. The meeting was once again at David Hellman's office.
Carolyn first presented Jerry with a proposed agreement (W6 in evidence), which essentially provided that Jerry
would instruct his attorneys and other agents "to make available to Carolyn Garcia and her chosen attorney and accountant, any and all records she may ask for during this process of accounting and division."
Jerry immediately rejected this proposal and asked for the second agreement.
Carolyn then presented Jerry with a thirteen line proposal (W7 in evidence). Under this document Jerry was to pay Carolyn
$5 million at the rate of no less than $250,000 per year without interest. After reading this agreement Jerry immediately informed Carolyn that this was exactly what he wanted, initialled and then signed it.
In due course Jerry began to make payments on the agreement in the amount of $20,833 per month ($250,000 per year), which payments continued until he died. At no time, while the settlement was being performed, did
Jerry or his legal and business representatives object to or disavow the settlement. At all times Jerry performed his obligations under the settlement and acted consistently with its terms.
W7 is not
a generic multipage marital settlement agreement commonly used in family law proceedings. It is a simple contract to pay money. A key sentence in the agreement is the following:
"In order
to simplify the process of dissolution, Carolyn Garcia agrees to a cash settlement of $5,000,000 to be paid to her by Jerome Garcia, his estate, or his heirs." Among other matters, the consideration for this
agreement was forbearance: Jerry and Carolyn's mutual agreement to forbear from further litigation. From the agreement and the parties' conduct, the Court concludes that it was the parties' intention in signing W7
to resolve and settle the financial and property aspects of their marital dissolution, e.g., there would be no spousal support; there would be no award of attorneys fees or costs; Carolyn would be paid $5 million over
time, and in return Jerry would receive all of the parties' community property. The agreement was simplistic but this is what Jerry and Carolyn wanted. The agreement has all the elements of a valid and
binding contract. The terms of this contract are sufficiently certain, reflect a lawful purpose, and are supported by adequate consideration.
Consideration may be an act, forbearance, change in legal
relations, or a promise. The fact that an agreement is in writing provides presumptive evidence of consideration. In view of all the facts and circumstances of this case, the agreement in question contains
more than adequate consideration. To reach this conclusion the Court has considered the agreement itself as well as all of the evidence presented at trial. The Court has weighed the credibility of the
witnesses, The Court finds Carolyn's testimony to be especially persuasive.
Both parties produced the testimony of forensic accountants at trial regarding the valuation of the parties' community
property assets as well as the discounted value of the $5 million note. Other than noting that Jerry's accountant tended to value assets on the low side and Carolyn's on the high side, the Court finds from the
evidence that the value of the settlement of $5 million (regardless of what present value discount method is used) falls within the parameters of a reasonable settlement. And that is exactly what Jerry and Carolyn
chose to accomplish at their May 11, 1993 meeting: to forbear from further litigation and reach an amicable and fair settlement. And the parties' subsequent actions bespeak their intent: Carolyn moved
back to Oregon and Jerry paid the money.
Family Code Section 2550 requires the court in its judgment to divide the parties' community property equally. Section 2550 allows an exception from the equal
division requirement "... upon the written agreement of the parties..." Here Jerry and Carolyn's simple contract to pay money provides the exception to the provisions of Section 2550.
Jerry's estate objects that the contract is vague and uncertain. The Court rejects this claim, particularly in light of the terms of the agreement, the circumstances in which the parties negotiated it, their
conduct, and all of the other evidence at trial. Jerry's and Carolyn's agreement is sufficiently definite to be enforced. It includes all essential terms (e.g., settlement amount of $5 million with minimum
required payments per year until debt is retired in resolution of the marital property rights of Carolyn not previously settled by the parties, as well as Carolyn's right to spousal support).
The fact that
the parties did not include provisions for interest, security and the like does not render the agreement uncertain, nor should the fact that their attorneys attempted to negotiate such provisions for a formal marital
settlement agreement make the agreement invalid or unenforceable. Such provisions were not necessary to the parties' agreement. It did exactly what Carolyn and Jerry apparently wanted it to: it settled
any community property and support claims she might have against Jerry. In any event, any issue of vagueness was rendered moot by the parties' subsequent performance.
While Jerry was alive neither he
nor his attorneys ever made any attempt to rescind the May 11, 1993 agreement. On May 12, 1993, David Hellman sent a copy of the agreement to Bruce Stilson, Jerry's attorneys (H33 in evidence). This letter
from Mr. Hellman to Mr. Stilson and referring to Jerry and Carolyn stated "...as far as they are concerned, this resolves all issues related to the marriage..."
On May 20, 1993, Mr. Stilson
prepared a draft marital settlement agreement and sent this with a letter (H34 in evidence) to Carolyn's attorney. Paragraph 17 of this proposed marital settlement agreement, drafted by Jerry's own attorney,
contained the provisions of the $5 million agreement entered into by Jerry and Carolyn on May 11, 1993. The negotiations went on and on between the attorneys concerning the terms of a formal marital settlement
agreement. Such an agreement was never executed prior to Jerry's death, but every draft of the proposed marital settlement agreement contained the terms of the May 11, 1993 agreement. As late as February 13,
1995 (H55 in evidence) Mr. Phillips sent to Evelyn Deane (who had become Jerry's attorney) a letter with another draft of a marital settlement agreement. Paragraph 9 of his proposed agreement once again had the
provisions of the May 11, 1993 agreement.
In sum, Jerry Garcia entered into an enforceable contract with Carolyn "Mountain Girl" Garcia, his wife and the mother of his children. Jerry honored the
agreement while he was alive. Jerry's estate cannot rescind the contract after Jerry is gone.
The Court will dispose of Jerry's estate's other objections to the contract summarily. The fact that the parties did
not comply with the full disclosure statutes, Family Code Section 2100 et seq., does not prevent the enforceability of their contract. The consideration for their contract included their mutual agreement to
forbear further litigation, and this agreement would include failure to comply with the full disclosure statutes. In any event, it was Jerry who was in exclusive control of the financial and other information
which was pertinent to the settlement; therefore, Jerry was not prejudiced by the absence of formal disclosure documents. In light of all of these facts, as well as the fact that Jerry is deceased and cannot
comply with the disclosure requirements, and the fact that the estate cannot reasonably make such disclosure on behalf of the decedent, the court finds good cause to permit entry of judgment without an exchange of
declarations,
There was no breach of the parties' mutual fiduciary duty to each other. The Court has found that the $5 million settlement was within the parameters of a fair settlement. The fact that
the parties chose to enter into the agreement without counsel was their business. The fact that the parties' counsel after the execution of the agreement were unable to negotiate a complete marital settlement
agreement prior to Jerry's death does not render the $5 million agreement unenforceable.
There was no undue influence or coercion on Jerry resulting in his signing the agreement, nor mistake by him.
David Hellman did not participate in Jerry and Carolyn reaching an agreement. He simply provided a meeting place for them, made some comments on the agreement after it had been signed, and sent copies
to their respective counsel. Despite allegations by Petitioners, the evidence does not support the contention that David Hellman conspired with Carolyn, or that either Mr. Hellman or Carolyn exerted any undue
influence on Jerry. The Court finds that David Hellman did nothing unethical or improper in allowing Jerry and Carolyn to meet at his office.
In accounting for the amount of money that Jerry still
owes Carolyn, Jerry's estate is to receive credit against the principal sum due Carolyn under the agreement for all sums he paid to Carolyn after May 11, 1993, whether characterized as family support or the $20,833 per
month payment under the agreement. Jerry was, however, liable to Carolyn for any arrearage on family support which existed as of the execution of the agreement on May 11, 1993.
Both parties must bear
their respective attorneys fees and costs incurred by them in the dissolution of marriage proceedings prior to the time of Jerry's death. However Carolyn is entitled to her attorneys fees and costs incurred after
Jerry's death in enforcing the terms of the parties' written agreement. The Court finds that such an award is appropriate in light of the disparate financial circumstances of the parties, Carolyn's right to
competent professional representation, the skills and qualifications of the attorneys, and the difficulties of this case.
The Court will order that the Estate of Garcia pay Carolyn's attorneys fees incurred
after Jerry's death as set forth in the declarations previously submitted by her attorneys, and all costs incurred, with the Court reserving jurisdiction to allocate liability for said fees and costs between the Estate
and Carolyn upon the judgment of this Court becoming final and the final determination of any appellate remedies undertaken by either party.
The attorneys for Respondent are to prepare and submit to the
Court a form of judgment.
Dated: April 3, 1997
Michael B. Dufficy, JUDGE
