The Gift That Keeps On Taking

We've all played a bad card in poker, made aridiculous wager or simply tripped ourselves in some facet of our lives. We eventually accepted the stupid mistake and moved on.

Not Julio Sanches. But don't say anything if you see him walking funny these days. Last month, he discovered the ramifications of a decision he'd made 36 years ago: He screwed himself out of $300,000.

The story begins in the summer of 1965, when Julio romanced and then married Sandra in Tijuana. They had two children and, using a Veterans Administration loan, bought a new, three-bedroom home on Wintergreen Drive in Huntington Beach for $30,000. The couple's monthly house payment—including insurance and property taxes—was $182.


You're weeping, aren't you?

So is Julio.

In the summer of 1969, "unhappy differences" arose in the marriage. He moved out. They divorced the following year. Court records from the era show that the couple split stock they owned in Technicolor and Ford. He got the 1963 Falcon and his freedom. She got the 1963 Buick Wagon and the kids.

On Sept. 12, 1971, Julio—who'd remarried and moved to Orange—wrote Sandra a letter declaring he'd never make another payment on the house they'd bought together. He added, "I will stop gaining equity on the house at the end of this month."

The next day, Julio handed Sandra a second letter.

"I've already notified [the bank] that I'm not making another payment," he wrote. "When they have to evict you, they can sell the house and send half the profits (if any) to you and the other half to me."

In a recent trial, Julio recalled that after handing Sandra the letter, he probably told her to "have a nice day."

The eviction never happened. For the next 13,000 days, Sandra proved her strength. She took care of the kids, made all the house payments and kept the property—located about a mile from the Pacific Ocean—in good condition. Not once did her ex-husband inquire about the property.

But in 1995, Julio and his second wife decided they were entitled to half of the value of the Huntington Beach house. Without telling Sandra, they took a $250,000 loan against the property and transferred a deed of trust to Continental Financial Group, a Nevada corporation Julio created to hide his assets from creditors. He later testified that he learned the trick during a business seminar.

The reason Julio didn't tell Sandra what he'd done? R.E. Scott, Julio's lawyer, says it was because "she would have hit the roof."

Scott explains that his client always, if quietly, "viewed [the Huntington Beach house] as an investment."

Almost a decade later, in 2004, a Realtor helped Sandra discover Julio's slick move. With the help of lawyer Morris Stone, she filed a lawsuit against the "sham." Julio, she said, was only entitled to half of the property's value in 1971—not half of the 1995 value. Julio had hatched a plot for "unjust enrichment," says Stone.

In court, Julio, a Santa Ana pet-store owner, tried multiple maneuvers. He said he'd never meant to give up his right to half of the equity in the house as it appreciated over the decades. His 1971 letter was "invalid" and "merely an expression" or "a gratuitous promise" unenforceable by law, he argued. He claimed his letter wasn't a contract because Sandra hadn't signed it. He called her "frivolous." He even said he had been "deprived" because Sandra hadn't paid him rent on the house during the 36 years.

"What did Julio get?" Julio wrote to Superior Court Judge Sheila Fell. "Nothing. She wants it all."

Julio—who owns a large house in Anaheim and is semi-retired—wasn't done. He also claimed the statute of limitations had expired on enforcing his 1971 letter, and when that didn't work, he declared that the Superior Court of California had no jurisdiction over the matter.

On May 21, the court scoffed at Julio, calling his arguments, "to put it kindly, disingenuous."

"Sandra has fully performed the full financial burden of the house for 25 years," according to a ruling. "At no time did Julio disclose to Sandra his hidden intention that she would bear the entire financial burden of paying off the loan so that he could share in the bounty of a significant increase in the value of the home 25 years later. . . . Julio's contention lacks merit."

Poor, poor Julio.

Here's the kicker: The court awarded him a measly $3,000—half of the equity he had in the house in 1971. And then it ordered him to pay Sandra's substantial legal costs.

Scott, Julio's lawyer, says his client was disappointed in the ruling but had not yet decided if he will appeal to the California Supreme Court.


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