45 Cal.App.5th 184
Cal. Ct. App.2020Background
- George and Rosalinda married in 1996, separated in 2011; they have two children and George had custody at judgment.
- Prior to and shortly after the marriage, George and his siblings settled litigation over family trust properties by a written settlement agreement allocating various properties among the siblings; Rosalie received title to the "Florida Street" apartment property.
- In 1997 Rosalie executed an "amendment" under which she transferred Florida Street to George in exchange for cash, a promissory note, and George's assumption/option to assume existing debt; George later obtained refinances. Rosalinda signed a quitclaim deed (1998) and a spousal acknowledgement (2002) asserting no interest in Florida Street.
- At trial the court characterized Florida Street as George's separate property and found George's monthly income available for support was $25,332; it awarded Rosalinda $7,500/month spousal support. Both parties appealed.
- The Court of Appeal (published in part) reversed the trial court's complete characterization of Florida Street as George's separate property and remanded to determine reimbursement or any fractional separate interest (including consideration of Bonvino). The court also reversed the spousal support award and remanded for redetermination of support taking into account whether principal payments reasonably and legitimately reduce George's income available for support.
Issues
| Issue | Rosalinda's Argument | George's Argument | Held |
|---|---|---|---|
| Whether Florida Street was acquired by inheritance/devise (separate property) | Florida Street is presumed community (acquired during marriage); the 1997 transfer was a purchase and any quitclaim was ineffective due to undue influence | The settlement/amendment and family trust evidence show Florida Street was part of George's inheritance/devise and thus separate | Reversed trial court: as a matter of law the 1997 amendment was a purchase, not a devise; George did not acquire Florida Street by inheritance and trial court erred in treating it entirely as separate property; remand for accounting of separate contributions |
| Whether "inception of title" makes Florida Street separate | N/A (Rosalinda relies on presumption community) | George: had pre-marriage equitable rights in trust assets, so acquisition relates back as separate | Rejected: no evidence George had an equitable right to Florida Street before marriage; inception-of-title does not apply |
| Whether tracing or indirect tracing (lender intent/recapitulation) established Florida Street as wholly separate or warranted a fractional separate interest / reimbursement (including Bonvino theory) | Tracing and recapitulation support community character for loan-financed portion; Rosalinda argued reimbursement only | George: expert traced payments and claimed separate-property funds paid principal; on rehearing argued Bonvino supports fractional separate interest for separate down payment | Court: tracing evidence insufficient to show seller/lender relied solely on separate funds; community presumption applies to credit-financed portion; remanded to determine section 2640 reimbursement and to consider any Bonvino-based fractional-interest claim |
| Whether principal payments on income-producing property should reduce income available for spousal support | N/A (Rosalinda opposed deduction) | George: principal payments are necessary business expenses to preserve income stream and should be deducted from income available for support | Reversed spousal award; court adopts a Fleenor-style rule: trial court must decide on remand, based on substantial evidence, whether principal payments reasonably and legitimately reduce income available for support (deduction permitted in discretion; disallowed if excessive, intended to depress income, or not reasonably necessary) |
Key Cases Cited
- In re Marriage of Buol, 39 Cal.3d 751 (Cal. 1985) (status of property is normally determined at time of acquisition)
- In re Marriage of Haines, 33 Cal.App.4th 277 (Cal. Ct. App. 1995) (presumption that property acquired during marriage is community unless traced to separate source)
- In re Marriage of Mix, 14 Cal.3d 604 (Cal. 1975) (indirect tracing/recapitulation method explained)
- Gudelj v. Gudelj, 41 Cal.2d 202 (Cal. 1953) (property acquired on credit during marriage is presumed community unless lender intended to rely solely on separate funds)
- In re Marriage of Grinius, 166 Cal.App.3d 1179 (Cal. Ct. App. 1985) (character of loan-financed acquisitions and lender intent analysis)
- In re Marriage of Walrath, 17 Cal.4th 907 (Cal. 1998) (section 2640 reimbursement principle: separate contributions are reimbursable absent written waiver)
- In re Marriage of Bonvino, 241 Cal.App.4th 1411 (Cal. Ct. App. 2015) (down payment of separate funds may preserve a fractional separate interest rather than only a section 2640 reimbursement)
- In re Marriage of Blazer, 176 Cal.App.4th 1438 (Cal. Ct. App. 2009) (trial court may deduct reasonable business expenses from business income when setting support)
- In re Marriage of Cheriton, 92 Cal.App.4th 269 (Cal. Ct. App. 2001) (trial court must consider all applicable section 4320 factors when awarding spousal support)
- Fleenor v. Fleenor, 992 P.2d 1065 (Wyo. 1999) (adopted middle-ground rule allowing trial court discretion to deduct principal payments that reasonably and legitimately reduce income available for support)