Marriage of Girouard and Frazier
Filed 9/12/12 Marriage of Girouard and Frazier CA1/2
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST
APPELLATE DISTRICT
DIVISION
TWO
In re the Marriage of GERALD
GIROUARD and LISA FRAZIER.
GERALD P.
GIROUARD,
Appellant,
v.
LISA D.
FRAZIER,
Respondent.
A131286
(San Mateo
County
Super. Ct.
No. FAM 094581)
INTRODUCTION
Appellant
Girouard, the former husband of respondent Frazier, appeals from a
trial court, a judge pro tem stipulated to by the parties. Appellant contends that the court erred by
giving respondent a reimbursement from the community property estate for
one-half of the value of a community property investment in two pieces of
appellant’s separate real property both of which were sold during the marriage. The trial court ordered this reimbursement
pursuant to the rule of In re Marriage of
Moore (1980) 28 Cal.3d 366 (Moore) and In re Marriage of Marsden (1982) 130 Cal.App.3d 426 (
here and the applicable law regarding the Moore/Marsden
rule, the trial court erred. We hold
that respondent was not entitled to any additional monetary payment at the time
of the parties’ divorce because of the Moore/Marsden
interest in appellant’s two previously-held properties. We thus reverse and remand the matter to the
trial court for further proceedings consistent with this opinion.
II. STATEMENT OF FACTS
The parties were
married on September 27, 2001, and separated on May 5, 2007. Both parties are licensed real estate brokers
and they engaged in several complex real estate transactions during the course
of their marriage. This appeal pertains
to three specific real estate assets:
(1) 727 Oakview Way in Redwood City (727 Oakview); (2) 731 Oakview Way
in Redwood City (731 Oakview); and (3) 662 West Glen Way in Woodside (the
Woodside property).
On
February 6, 2001, just prior to the parties becoming engaged to be married,
they bought a home at 727 Oakview and a vacant lot at 731 Oakview (jointly, the
Oakview properties). Appellant used his
separate property funds to purchase the Oakview properties, but the parties
took title as tenants in common, with each having a 50 percent interest. A few weeks later, however, on February 23,
2001,
respondent executed two grant deeds in favor of appellant, thus relinquishing
any interest she had in the Oakview properties.
In
2002, appellant sold 731 Oakview, but he exercised an option to repurchase that
property in 2003 as part of a joint venture with a third party. During the marriage, a home was built on 731
Oakview and substantial improvements were made to 727 Oakview. In around April 2003, the parties began using
727 Oakview as their primary residence.
On
April 24, 2003, respondent signed another deed pertaining to the Oakview properties,
an Interspousal Transfer Deed. Pursuant
to that deed, respondent wife granted her appellant husband the two Oakview
properties “as his sole and separate property.â€
In
December 2003, the parties purchased the Woodside property for $1,500,000, taking
title in their joint names. This asset
was acquired as part of a “reverse exchange†transaction pursuant to which 731
Oakview was sold in May 2004.
On
June 27, 2006, 727 Oakview was sold and the parties moved their primary
residence to the Woodside property.
B. The Dissolution Action
On
May 9, 2007, appellant instituted this action by filing a petition for
dissolution of the marriage. During
2007, three preliminary matters were decided pursuant to stipulations between
the parties. First, on June 11, attorney
Dennis Durkin was appointed and designated temporary judge and charged with
determining all issues in this case.
Second, on September 13, Lisa Jolicouer, CPA, was appointed as the trial
court’s expert pursuant to Evidence Code section 730. Third, on December 19, the trial court
entered a judgment bifurcating the issue of marital status from other issues in
this case and terminating the parties’ marital status. There remained, however, several financial issues
to be determined.
In
the meantime, on April 16, 2008, the parties sold the Woodside property. As best we can determine, neither party has
ever disputed that the Woodside property was a 100 percent community property
asset and that it constituted the primary material asset of the marriage at the
time of separation. The proceeds of the
Woodside sale were divided equally, with each party receiving a payment of
$945,042. However, these amounts were
deposited into two blocked accounts at First Republic Bank that remained
subject to the court’s jurisdiction pending resolution of the financial claims
of the parties.
C. Expert Reports
In
April 2008, Jolicouer sent the parties three reports in which she summarized
preliminary findings pertaining to her review of several real estate transactions
that occurred during the marriage, including transactions pertaining to the
three real estate assets at issue in this appeal. The purpose of Jolicouer’s review was to
identify community and separate property interests in the properties and also
to trace funds utilized during the various transactions. All three reports contain requests that
appellant provide additional information and missing documentation pertaining
to the transactions.
On
September 10, 2008, Jolicouer sent the parties an “Asset Tracing Report†which
contained the results of her review of the real estate transactions discussed
in her April 2008 reports. Jolicouer
reported that she was asked to perform two “tracings†in connection with the
Oakview properties, one based on the legal theory that these properties were
appellant’s separate property and the second based on the theory that the
parties each owned a 50 percent interest in the Oakview properties as tenants
in common.
According
to the Asset Tracing Report, under the separate property tracing methodology
which assumed the Oakview properties were appellant’s separate property,
Jolicouer “treated all debt and sale proceeds as [appellant]’s separate
funds. To the extent determinable, these
funds were traced to the improvement or acquisition of other properties. This analysis further determined the extent
to which community funds were utilized in the improvement of the properties,
providing for the related calculation of the amount the community is entitled
to share in each property’s appreciation (aka Moore Marsden analysis).â€
As
part of her separate property tracing analysis, Jolicouer drew the following
conclusion about appellant’s separate property contribution to the acquisition
of the Woodside property: “Under the
Separate Property tracing, [appellant] is considered to have funded $269,048 of
the purchase price and $139,111 of the improvement costs of [the Woodside
property.] As such, he is entitled to a
reimbursement from the community in those amounts. See Schedule 2. The community funded all other remaining
costs of the acquisition and improvement of this property.â€
As
part of her separate property tracing analysis, Jolicouer also conducted a
calculate the interests that the community acquired in the two Oakview
properties during the course of the marriage.
In this regard, Jolicouer found that (1) the community contributed
$264,660 to the acquisition of 727 Oakview and thereby acquired a 12.97 percent
interest in the appreciation of that property; (2) the community contributed
$89,462 to the initial acquisition of 731 Oakview and thereby acquired a 13.27
percent interest in that property; and (3) the community contributed $61,519 to
the re-acquisition of 731 Oakview in 2003 and thereby acquired an additional
7.13 percent interest in that property.
On
July 15, 2010, Jolicouer sent a letter to appellant’s counsel in response to
his request that she provide her “bottom line†conclusions, depending on the
court’s resolution of several outstanding issues as they relate to the division
of property. Jolicouer referred counsel
to an attachment to her letter which she described as her “work which
summarizes my results based on different scenarios.†The attachment to Jolicouer’s July 15 letter
consists of 21 pages of tables and charts collectively referred to as a
“Results Comparison.â€
One
set of conclusions contained in Jolicouer’s Results Comparison employed a
methodology assuming that (1) the parties separated in May 2007 and (2) the
Oakview properties were appellant’s separate property. Under that scenario, Jolicouer’s bottom-line
conclusion was that the amount of funds due to respondent in excess of
appellant at final disposition of the community estate is $117,312. In a footnote associated with this
conclusion, Jolicouer explained that this amount “represents the net difference
that [respondent] is due in excess of [appellant] upon the final disposition of
the community estate.†Jolicouer calculated
this net award by crediting appellant with a total reimbursement claim of
$204,895 and crediting respondent with a total reimbursement claim of
$322,207.
Jolicouer
calculated appellant’s reimbursement claim by adding (1) appellant’s separate
property contribution to the purchase of the Woodside property ($269,048), (2)
appellant’s separate property contribution to the improvements of the Woodside
property ($139,111), and (3) appellant’s separate property contribution to the
purchase of a different community property asset, a property located on 1300
Arguello Street in San Francisco ($1,631).
Jolicouer then concluded that respondent owes appellant one-half of the
sum of these figures, i.e., $204,895.
Jolicouer
calculated respondent’s reimbursement claim by adding (1) the community’s
Woodside properties ($468,359
name="_ftnref3" title="">[3]),
and (2) the amount by which appellant’s post-separation personal expenditures
of community funds exceeded respondent’s post-separation expenditures of those
funds ($176,056). Jolicouer then
concluded that appellant owes respondent one-half of the sum of these figures,
i.e., $322,207.
As
noted above, the difference in these two amounts was the $117,312 sum she found
(and the court agreed) was due from appellant to respondent.
D. Trial and Judgment
A
court trial was conducted over several days in the summer and fall of
2010. A primary issue under dispute was
the characterization of the Oakview properties.
Appellant argued that the Oakview properties were his separate property
and that respondent had waived the community’s Moore/Marsden interest in those properties by signing the
interspousal transfer deed in 2003.
Respondent argued that the parties each owned a 50 percent interest in
the Oakview properties pursuant to the original titles and that the subsequent
deeds she executed were void because they were obtained through undue influence
and breach of fiduciary duties by appellant.
Alternatively, respondent argued that the Oakview properties were
community property.
Although
Jolicouer testified at trial, she did not offer an opinion regarding the
characterization of the Oakview properties.
Nor did she squarely address or otherwise explain the assumption in her
bottom-line Results Comparison report that respondent was entitled to a
that the court were to find that the Oakview properties were appellant’s
separate property. Furthermore, although
several of Jolicouer’s reports were admitted into evidence at trial, the schedules
that provided support and documentation for many of her assumptions and
conclusions were not admitted.
The
trial court issued a tentative decision on November 9, 2010, and a statement of
decision on December 21, 2010. According
to the statement of decision, the characterization of the Oakview properties
was a “primary issue in this case driving the other issues.†Ultimately, the court found that the Oakview
properties “are [appellant’s] separate property subject to a
community.â€
In
reaching this decision, the court rejected respondent’s theory that either she
owned a 50 percent interest in the Oakview properties or they were community
property. The court reasoned that the
pre-marital grant deeds signed by respondent wife “create a presumption under
Evidence Code § 662 [that] Jerry is the sole owner of the Oakview
properties (subject to her Moore/Marsden claims). Lisa has the burden of proof to rebut the
presumption by clear and convincing evidence.
[The court] finds Lisa has failed to meet her burden.â€
However,
the court also rejected the appellant’s trial theory that respondent waived the
community’s Moore/Marden interest in
the Oakview properties by executing the Interspousal Transfer Deed during the
marriage on April 24, 2003. The court
reasoned as follows: “Jerry argues this
deal waives any Moore/Marsden claim
through that date. This deed was
executed during marriage, and is subject to fiduciary duty issues as discussed
in Marriage of Haines (1995) 33 CA4th
277 and Marriage of Delaney (2003)
111 CA4th 991. If Jerry’s position is
correct he gained an unfair advantage by the Interspousal Transfer Deed. The unfair advantage creates a presumption of
undue influence. Jerry has the burden of
proof by a preponderance of the evidence to show that Lisa freely and
voluntarily signed the Interspousal Transfer Deed with full knowledge of all
relevant facts and a complete understanding of the effect of the transfer. Marriage
of Haines, supra, at 297. The
presumption of undue influence trumps the presumption of Evidence Code
§ 662, and Lisa is entitled to a set aside of the Interspousal Transfer
Deed. Marriage of Haines, supra, at 297-298. Jerry has failed to meet his burden of proof
to show that Lisa was aware of her Moore/Marsden
rights, and knowingly waived those rights.â€
The court then
adopted (with one minor exception not relevant to this appeal) what it referred
to as Jolicouer’s “post separation accounting . . . dated
September 10, 2008, as modified July 15, 2010, using the scenario that assumes
the Oakview properties are [appellant’s] separate property with a date of
separation of May 6, 2007.â€
Specifically, the court accepted and adopted Jolicouer’s bottom-line
conclusion that appellant owes respondent a net payment of $117,312 to
compensate her (primarily) for her share of the Moore/Marsden community interest in the two Oakview Way
properties. In this regard, the
statement of decision states: “Judge Pro
Tem Durkin finds this analysis includes and disposes of all claims for reimbursement
and credits including the community’s Moore/Marsden
claims in 727 & [731] Oak View Way and Jerry’s Family Code §2640 claimâ€
in the Woodside property.
A judgment of
dissolution and a notice of entry of judgment consistent with the trial court’s
statement of decision were filed December 21, 2010. On January 24, 2011, the court filed and
served some findings modifying its earlier statement of decision, but also
denying appellant’s motion for a new trial.
On February 23, 2011, appellant filed a timely notice of appeal.
DISCUSSION
A. Issue Presented and our Standard of Review
As
reflected in our factual summary, several components factored into Jolicouer’s
bottom-line conclusions. Only one of
those components is at issue on this appeal: appellant contends that the trial
court committed reversible error by adopting Jolicouer’s recommendation to give
respondent a reimbursement from the proceeds of the Woodside sale for a
one-half share of the community’s Moore/Marsden
interest in the Oakview properties.
In
addressing this issue on appeal, the parties agree that the community acquired
a Moore/Marsden interest in the two
Oakview properties. Furthermore, as
noted in our factual summary, there has never been a dispute that the Woodside
property is a community property asset.
Under these settled facts, the question whether the Moore/Marsden rule authorizes the reimbursement credited to
respondent and awarded by this judgment is one of law which we review de
novo. (See Bono v. Clark (2002) 103 Cal.App.4th 1409, 1421.)
B. Guiding Principles
In
order to resolve disputes regarding the division of marital property, a court
must start by characterizing that property as separate or community
property. (In re Marriage of Rossin (2009) 172 Cal.App.4th 725, 732 (
determine the rights and liabilities of the parties with respect to a
particular asset or obligation and is an integral part of the division of
property on marital dissolution. [Citation.]†(Ibid.) In other words, the trial court’s resolution
of this threshold inquiry, i.e., the decision whether an asset is community or
separate property, dictates what rules apply to determine the parties’ rights
and liabilities with respect to that asset.
For
example, if a court determines that a real property asset is the separate
property of one spouse, it may be necessary to apportion an interest in that
property to the community if there is evidence that community funds were
invested in the property. This inquiry
is conducted by applying the Moore/Marsden
rule. The Moore/Marsden rule states that when community funds are used to
make mortgage payments on a spouse’s separate property, the community acquires
“ ‘a pro tanto community property interest in such property in the ratio
that the payments on the purchase price with community funds bear to the
payments made with separate funds.’
[Citations.]†(
parties use community funds to pay down a mortgage, but also where they use
community funds to make improvements to a residence purchased by one of the
parties before marriage and those improvements increase the property’s equity
value.†(In re Marriage of Sherman (2005) 133 Cal.App.4th 795, 799-800; see
also, In re Marriage of Nelson (2006)
139 Cal.App.4th 1546, 1552; In re
Marriage of Branco (1996) 47 Cal.App.4th 1621, 1626-1627; 11 Witkin,
Summary of Cal. Law (10th ed. 2005) Community Property, §§ 118-119, pp.
681-686; Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group
2011) ¶¶8:326 et seq.)
If,
on the other hand, a court classifies a real estate asset as community
property, there is no apportionment of interests in that community asset. (Hogoboom & King, Cal. Practice Guide
Family Code section 2550, which states: “Except upon the written agreement of
the parties, or on oral stipulation of the parties in open court, or as
otherwise provided in this division, in a proceeding for dissolution of
marriage or for legal separation of the parties, the court
shall . . . divide the community estate of the parties equally.â€
name="_ftnref6" title="">[6]
Although
the determination that an asset is community property precludes apportioning a
separate property ownership interest in that asset, a spouse may be entitled to
a statutory reimbursement for his or her separate property contributions to
that community property asset.
(§ 2640.
name="_ftnref7" title="">[7]) Section 2640 “provides a right to
reimbursement upon dissolution for the spouse who contributed separate property
to the acquisition of property held in joint title, absent a written waiver of
the right to reimbursement.†(
858, 865.) “Though tracing to a separate
property source generally cannot defeat title
presumptions . . ., it will establish a prima facie statutory
right of reimbursement in a marital action dividing the community estate. [Citations.]â€
(In re Marriage of Cochran
(2001) 87 Cal.App.4th 1050, 1057.)
Furthermore, this statutory reimbursement right is not limited to the
original community property to which the separate property contribution was
made, but also applies to “any other community property that is subsequently
acquired from the proceeds of the initial property, and to which the separate
property contribution can be traced.†(
Cal.4th 907, 918 (Walrath).)
The
amount of the section 2640 reimbursement is measured by the value of the
separate property contribution at the time it was made. (§ 2640, subd. (b); Walrath, supra, 17 Cal.4th at p. 924; In re Marriage of Neal (1984) 153 Cal.App.3d 117, 124, fn. 11,
disapproved on another ground in In re
Marriage of Fabian (1986) 41 Cal.3d 440.)
When the source of the separate property contribution is itself a real
property asset, valuing that contribution might require a Moore/Marsden analysis.
(Hogoboom & King, Cal. Practice Guide, supra, ¶8:457; cf. In re Marriage
of Kahan (1985) 174 Cal.App.3d 63, 77 (Kahan);
In re Marriage of Neal, supra, 153 Cal.App.3d at p. 124, fn. 11.) For example, if a party converts her separate
property home into a community property asset during marriage, her separate
property reimbursement right would be calculated by determining the fair market
value of the property at the time of the conversion, less outstanding
encumbrances and less any community property contributions prior to the
conversion. (Kahan, supra, 174 Cal.App.3d at p. 77.) In this context, the Moore/Marsden rule is used to quantify the value of the spouse’s
separate property contribution to the subsequently-acquired community asset.
C. Analysis
As
noted at the outset of our analysis, to resolve this appeal, we focus on a
single discrete issue: whether
respondent is entitled to a reimbursement from the community estate consisting
of the proceeds of the Woodside property for her share of the community’s
properties.
Applying
the rules summarized above to the undisputed facts, we conclude that the
additional reimbursement to respondent cannot be sustained. The Woodside property was the only property
subject to division by the trial court because the Oakview properties were both
sold during the marriage. Since the
Woodside property was 100 percent community property, the parties’ interests in
that asset are dictated by section 2550, not by applying the
As
reflected above, the Moore/Marsden
apportionment rule applies to the division of a separate property asset of the
marriage to which a specific investment or contribution of community property
was made. (Moore, supra, 28 Cal.3d at p. 372; In re Marriage of Sherman, supra, 133 Cal.App.4th at pp. 799-800;
Cal.App.4th at p. 1552; In re Marriage of
Branco, supra, 47 Cal.App.4th at pp. 1626-1627.) However, the Moore/Marsden rule does not create a right to reimbursement from a
community property asset. (See § 2550.) Indeed, we find no authority which even
suggests that it is possible to identify a cognizable community property
interest in an asset that already belongs to the community. Furthermore, even if there were some way that
a court could apportion a Moore/Marsden
interest in a community property asset, that exercise would be futile because
the newly-identified interest would be subject to the equal division rule of
section 2550.
title="">[8]
Section
2640 creates a statutory exception to the equal division rule of section 2550
by establishing a right to reimbursement for the value of a separate property
contribution to the acquisition of a community property asset provided that the
contribution can be properly traced.
Although this statute may support the reimbursement credit awarded to
appellant for his separate property contributions to the Woodside community
property asset, it does not support Jolicouer’s conclusion that respondent was
also entitled to a reimbursement from the Woodside property for the community’s
Moore/Marsden interests in the
Oakview properties. We simply cannot
find any legal basis for sustaining that award.
We
understand that there is no dispute on appeal that the community did acquire
properties. That fact and the tracing
analysis that Jolicouer performed to support it may have been relevant to many
of the complex issues she was asked to address.
For example, Jolicouer’s Moore/Marsden
analysis may have supported her calculation of the value of appellant’s section
2640 reimbursement claim since that claim was based on contributions traceable
to the Oakview properties and the community held equity interests in those
assets. (Cf. Kahan, supra, 174 Cal.App.3d at p. 77.) However, Jolicouer’s finding that the
community acquired Moore/Marsden
interests in the Oakview properties does not validate or in any way support the
reimbursement credit that Jolicouer gave to respondent in this case because the
Oakview properties were sold during the marriage and are not subject to
division in this dissolution proceeding.
In
short, there appears to be no legal
authority supporting the most significant component of the reimbursement
credit that Jolicouer gave to respondent in her bottom-line report. Specifically, the Moore/Marsden rule, which is the only rule upon which Jolicouer
relied, does not justify giving respondent a credit for one-half of the
community’s $468,359 in the Oakview properties.
Respondent argues otherwise in her appellate brief, but her theory is
factually and legally unsound.
Respondent’s
argument, in a nutshell, is that the community’s Moore/Marsden interest in one spouse’s separate property asset
survives after that asset is sold so long as that Moore/Marsden interest (1) is not waived and (2) can be traced to
another acquisition of the marriage.
Unable to support her Moore/Marsden
tracing rule with relevant authority, respondent relies on the language of section
2640 and the leading case construing that statute, Walrath, supra, 17 Cal.4th 907.
Respondent reasons that section 2640 and the Moore/Marsden rule create essentially analogous rights and,
therefore, authority which permits tracing of a separate property interest to
subsequently acquired property also permits tracing of a community property
interest to subsequently acquired property.
As
a factual matter, we find no evidence in this record to support appellant’s
assumption that Jolicouer “traced†the community’s Moore/Marsden interest in the Oakview properties to the acquisition
or improvement of the Woodside property.
Reading the reports together, it appears that Jolicouer simply
calculated the Moore/Marsden interest
in each property and then used those calculations to support the reimbursement
credit that she gave respondent in her bottom-line report.
In
any event, respondent’s Moore/Marsden
tracing theory fails from the start because she completely skips the essential
threshold inquiry in a community property analysis, i.e., determining the
character of the property that is potentially subject to division by the trial
court. In this case, that property is
the Woodside property which is a 100 percent community property asset. As both a conceptual and practical matter, a
court cannot apportion a community property interest in a community property
asset.
Furthermore,
the analogy respondent draws between the Moore/Marsden
rule and section 2640 is a false one.
Section 2640 creates a statutory right to reimbursement at the time of
dissolution for a separate property contribution “to the acquisition of
property of the community property estate to the extent the party traces the
contribution to a separate property source.â€
(§ 2640, subd. (b).) The
apportions substantive property interests in a marital asset between the
community and the separate property of one or both spouses. In other words, these rules perform very
different functions. For this reason,
respondent’s reliance on Walrath
incorrect.
In
Walrath, supra, 17 Cal.4th 907, the
husband had made a separate property contribution to a community property asset
that was sold during the marriage and used to acquire another community
property asset that was subject to division as part of the dissolution
proceeding. Our Supreme Court held that
section 2640 authorizes reimbursement for a separate property contribution from
the community property to which the separate property was contributed and also
from “any other community property that is subsequently acquired from the
proceeds of the initial property, and to which the separate property
contribution can be traced.†(
detailed analysis of the statutory language and history of section 2640. (Id.
at pp. 918-920.) In reaching its
decision, the Walrath court did not
hold or even suggest that an analogous tracing rule should apply to the
community’s Moore/Marsden interest in
a spouse’s separate property asset. The
have already discussed above, that rule applies in a completely different
context and performs a fundamentally different function.
Indeed,
in the case of a Moore/Marsden
interest, there is simply no functional need for a special tracing rule. When a Moore/Marsden
interest in a separate property asset is traced to a community property
acquisition, then, as matter of fact, the community receives ownership credit
for its prior community property interest.
If, on the other hand, a Moore/Marsden
interest in a separate property asset is traced to another separate property
asset, then a Moore/Marsden analysis
of that subsequently acquired asset will result in an apportionment of an
interest in that subsequently acquired property to the community without the
need for any special tracing rule.
In
a supplemental brief, filed at the request of this court, respondent abandons
her theory that a Moore/Marsden
interest is analogous to a section 2640 reimbursement right, and argues instead
that, by operation of law, a Moore/Marsden
interest in a separate property asset becomes two distinct separate property
interests at the time that the underlying separate property asset is sold.
Applying
this new theory to her situation, respondent formulates the following
argument: (1) she paid for part of the
Woodside community property residence “with her Moore/Marsden interest that she was entitled to receive, but did
not receive when the Oakview property was exchanged for the [Woodside]
property,†(2) “[h]ad she received her interest when she should have, at the
time of the conversion of the Oakview property into the [Woodside] property,
that interest would have been her separate property,†but (3) “[i]nstead of
receiving her interest, she contributed it to the purchase of [the Woodside
property] which then creates the same right of reimbursement that any spouse
has pursuant to Family Code section 2640 when community property is acquired
with traceable separate property proceeds.â€
Preliminarily,
we must address some factual problems with respondent’s theory. First, this is a brand new theory; there is
no evidence that respondent ever made a claim in the trial court that she was
entitled to a section 2640 reimbursement, or that she contributed any of her
separate property to the acquisition of the Woodside property or to any other
asset of the marriage.
Second,
respondent contends that the Oakview property was exchanged for and converted
into the Woodside property. By these
statements, we assume respondent is referring to 731 Oakview which was used in
the “reverse exchange†transaction pursuant to which the parties acquired the
Woodside property. However, it is
important to note that there were two
Oakview properties and Jolicouer reimbursed respondent for the community’s
interest in both of those properties.
Thus, as a matter of fact, respondent’s new theory cannot justify the reimbursement
award she received.
Third,
respondent contends that her share of the Moore/Marsden
interest in 731 Oakview was used to acquire the Woodside property. However, we find no evidence in this record
that Jolicouer traced any funds from
the proceeds of the sale of 731 Oakview to the acquisition of the Woodside
property notwithstanding the fact that both properties were used in the reverse
exchange transaction. In this regard, we
note that the section 2640 reimbursement that Jolicouer gave to appellant for
his separate property contribution to the acquisition of Woodside was
rather to the proceeds of a loan appellant secured against 727 Oakview.
Even
if we ignore these factual issues, respondent fails to support any of the legal
presumptions implicit in her new theory.
For example, respondent asserts that she was entitled to receive her
share of the Moore/Marsden interest
in 731 Oakview when that property was sold.
However, she simply ignores the principle that a Moore/Marsden interest is by definition a community property
interest.
Section
751 establishes that “[t]he respective interests of the husband and wife in
community property during continuance of the marriage relation are present,
existing, and equal interests.†Neither
this statute nor any other law of which we are aware gives either spouse an
exclusive, divisible, 50 percent interest in a community property asset during
the ongoing marriage. (See Hogoboom
& King, Cal. Practice Guide, supra,
¶8:15.1 [“The spouses’ ‘equal’ interests within the meaning of § 751 are
50-50 interests in the whole of the
community property—not ‘exclusive’
interests in only one half of the community property. In other words, neither spouse has a 50%
ownership interest in the community estate to the exclusion of the other.â€];
655, 658 [applying California law to find that wife’s community property
interest in husband’s pension was subject to IRS levy to satisfy husband’s tax
liability].)
Respondent
also makes the remarkable contention that, as a matter of law, one-half of the
community’s Moore/Marsden interest in
731 Oakview became her separate property when 731 Oakview was sold. Section 770, subdivision (a) establishes that
the “Separate property of a married person includes all of the following:
[¶] (1) All property owned by the person before marriage. [¶] (2) All
property acquired by the person after marriage by gift, bequest, devise, or
descent. [¶] (3) The rents, issues, and profits of the property described
in this section.†Thus, a spouse’s equal
interest in a community property interest is not his or her separate property
during the marriage.
For
all of these reasons, respondent’s theories on appeal do not alter our conclusion
that there is no legal basis for awarding respondent one-half of the
community’s Moore/Marsden interest in
the Oakview properties from the proceeds of the sale of the Woodside
property. Therefore, the
Jolicouer credited to respondent in the bottom-line report must be stricken and
the respective reimbursement rights of these parties must be recalculated.
Appellant
requests that this court strike the Moore/Marsden
credit from Jolicouer’s bottom-line report, recalculate the respective
reimbursement rights of the parties and modify the judgment accordingly. At oral argument before this court,
respondent’s counsel expressed concern that striking the Moore/Marsden credit could potentially affect many other aspects of
Jolicouer’s complex analysis and requested that, if this court decides to
strike the Moore/Marsden credit, the
case be remanded to the trial court so that it can make any other necessary
adjustments. It does appear that
Jolicouer’s bottom-line report addressed numerous complex and potentially
interconnected issues. However, as we
noted at the outset of our discussion, this appeal challenges only one discrete
finding on a purely legal ground. Any
other potential problem with the bottom-line report was not appealed and thus
cannot be challenged or altered pursuant to a remand order.
Nevertheless,
the record before us does not provide the information we need to modify this
judgment in the first instance. The
judgment itself does not actually award respondent a net credit of
$117,312. Instead, it uses that credit
to calculate other obligations of these parties. For example, the court used respondent’s net
credit to calculate appellant’s right to a refund of child support. Furthermore, when the judgment was entered,
the court reserved jurisdiction over other pending matters and it is simply not
clear whether those matters led to subsequent calculations and adjustments of
the reimbursement rights of these parties.
Under these circumstances and on this record, we conclude that a remand
is necessary.
However,
we are very concerned that this case has been pending for more than five years
at no small expense to these parties and the court system. Thus, we urge the judge pro tem to work
expeditiously to perform these discrete tasks on remand: (1) strike respondent’s Moore/Marsden credit, (2) recalculate the parties’ respective
reimbursement rights in the Woodside property solely to reflect the fact that respondent has no
judgment accordingly.
DISPOSITION
The
judgment is reversed and this case is remanded to the trial court with
directions to recalculate the respective reimbursement rights of the parties in
a manner consistent with this decision.
Costs on appeal are awarded to appellant
_________________________
Haerle,
J.
We concur:
_________________________
Kline, P.J.
_________________________
Richman, J.
factual findings of the lower court with one exception. In the statement of decision, the trial court
twice stated that these deeds were dated “February 23, 2010.†Clearly, this is incorrect; the correct year
was 2001.
tracing is difficult for several reasons, not the least of which is that many
of her assumptions and conclusions were explained and supported in schedules
that were not introduced into evidence at trial and are not part of the record
on appeal.
