IN RE: MARRIAGE OF Felix and Kathleen ROMANT.

Reset A A Font size: Print

Court of Appeal, Fourth District, Division 3, California.

IN RE: MARRIAGE OF Felix and Kathleen ROMANT. Felix ROMANT III, Respondent, v. Kathleen Anne ROMANT, Appellant.

No. G013102.

Decided: December 28, 1993

Nancy Bunn, Newport Beach, for appellant. Marilyn S. Slifman, Seal Beach, for respondent.

OPINION

Kathleen Anne Romant appeals portions of a judgment of dissolution of her marriage to Felix Romant III.

I

One month before Kathleen and Felix were to be married, they borrowed $20,000 from Felix's credit union to pay debts.   Kathleen's home was pledged as security and she executed a quitclaim deed changing title from Kathleen Anne Price to “Kathleen Anne Price and Felix Rudolph Romant III as joint tenants.”   The parties married on October 24, 1977.   In 1984, again wishing to borrow money, they pledged the house, this time executing a grant deed, deeding the property to Felix and Kathleen Romant, husband and wife, as joint tenants.

The parties separated in 1990.   At trial, Kathleen conceded the 1984 deed changed the property to community (Civ.Code, § 4800.1) 1 but argued she was entitled to reimbursement for her separate property contributions.  (§ 4800.2.)   She presented evidence to the court establishing the property's fair market value at the time of the 1984 transfer was $145,000 and the mortgage was $22,356.   She asked for reimbursement of $122,664.

The trial court denied Kathleen's reimbursement claim and, accepting the parties' stipulation the house was community property, ordered its equity equally divided between them.

II

Kathleen concedes the property is community property because title was taken in joint tenancy during the marriage and because there is no written statement to the contrary.2  (§ 4800.1.)   She maintains, however, she is entitled to a section 4800.2 reimbursement.

Section 4800.2 provides, in relevant part:  “In the division of community property under this part unless a party has made a written waiver of the right to reimbursement or signed a writing that has the effect of a waiver, the party shall be reimbursed for his or her contributions to the acquisition of the property to the extent the party traces the contributions to a separate property source.”  (Emphasis added.)

As conceded, the property is community and Kathleen may trace her separate property contributions to its acquisition.   Nevertheless, the trial court concluded, “The family residence ․ is a community asset.   The Petitioner acquired an equity interest in the property as joint tenant with Respondent in 1977 before marriage under a Quitclaim Deed executed by Respondent to herself and Petitioner.   Each party had an equitable interest in the home in 1984 when they executed a Grant Deed to themselves as husband and wife as joint tenants and re-financed [sic ] the home.   The only way the Respondent could receive a Civil Code § 4800.2 reimbursement would be if the court were to make a finding that there was no equity interest acquired by Petitioner in 1977.  [¶]  To do a § 4800.2 calculation or an accounting commencing in 1984 would be an act of futility in some respects and more of a ministerial accounting.   There was no evidence presented to the court that any other funds were sought to be reimbursed by any other party.   There was no request for reimbursement by the community for payments made to separate property which again would be a wash since both parties had an interest in 1977 to 1984.   There was no claim for reimbursement by any party as it relates to any other contributions to the acquisition of the property including down payments, improvements, or payments that reduced the principal of the loan used to finance the purchase.   The only issue the parties presented to the court with respect to the § 4800.2 issue was the equitable interest in the home as of 1984 and the Court finds pursuant to the evidence that was heard, that Petitioner did, in fact, have an equity interest in the home from 1977.   The Court therefore finds the home to be a community asset and that each party has a one-half interest.”

The trial court misunderstood the mandates of section 4800.2.   In In re Marriage of Neal (1984) 153 Cal.App.3d 117, 120–121, 200 Cal.Rptr. 341, the court held “a residence owned by a ․ spouse prior to marriage is her separate property, but is presumed to be the community property of the parties when, during the marriage, she places title to the property in joint tenancy with her spouse.   This presumption cannot be rebutted by an oral agreement between the parties that the property is to remain her separate property.   Thus, adding a spouse's name in joint tenancy to title of premarital separate property causes it to become ‘property acquired by the parties during marriage in joint tenancy form’ pursuant to Civil Code section 4800.1.   We further hold, for purposes of tracing and valuing the separate property contribution of the transferring spouse which must be reimbursed pursuant to Civil Code section 4800.2, that value is fixed by determining the value of her separate property interest as of the date of the property's conversion into joint tenancy, absent any other separate property ‘contributions to the acquisition of the property’ as defined in Civil Code section 4800.2.” 3  (Emphasis added.)

Applying the Neal principles to our facts exemplifies the court's error.   The 1984 transfer transmuted the property to community and the parties are entitled to reimbursement for their separate property contributions.   Since Kathleen can trace her contribution to the 1977 transfer, she is entitled to be reimbursed accordingly.

In re Marriage of Rico (1992) 10 Cal.App.4th 706, 12 Cal.Rptr.2d 659 is instructive.   There the parties, prior to marriage, purchased a home taking title as tenants in common.   The $37,000 down payment and other monies expended premarriage were paid by husband;  wife contributed $1,500.   After marriage, the parties refinanced the residence, changing title to joint tenancy.   The Court of Appeal held, “[W]hen, prior to marriage, spouses each contributed separate property funds to purchase real property, with title taken in both names as tenants in common, and payments after marriage are made with community funds, the correct method to calculate the separate and community interests of the parties upon dissolution is the same method as when the property is the separate property of only one spouse and payments after marriage are made with community property funds, that method is generally known as the [In re Marriage of] Moore [ (1980) 28 Cal.3d 366, 168 Cal.Rptr. 662, 618 P.2d 208] [In re Marriage of] Marsden [ (1982) 130 Cal.App.3d 426, 181 Cal.Rptr. 910] rule.”  (In re Marriage of Rico, supra, 10 Cal.App.4th at p. 708, 12 Cal.Rptr.2d 659.)

The trial court erred in denying Kathleen her section 4800.2 reimbursement.   It correctly concluded the 1977 premarriage deed created co-ownership of the property, but the transaction did not eliminate Kathleen's reimbursement right.

How is that right to be measured?   Kathleen maintains she is entitled to reimbursement of the value of the equity at the time of the 1984 conversion.   She is wrong because this ignores the significance of the 1977 deed.   In other words, because of the 1977 transfer, she and Felix were joint owners in 1984.   We therefore reject Kathleen's solution.

For several reasons, we do not embrace the formula set forth in Rico.4  First and foremost, Rico was decided prior to the enactment of section 4800.4, subdivision (a), which allows the court, at time of dissolution, to divide property owned by the parties prior to marriage “in accordance with the same procedure for and limitations on, division of community property․”  Rico's reliance, therefore, on a Code of Civil Procedure section 872.140 claim, which allows in a partition action, to “order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity” is unnecessary.   Section 4800.4 now provides the framework.5

Looking then to sections 4800.1, 4800.2 and 4800.4, we conclude as follows:  The property is community property.  (§ 4800.1.) Because no waiver exists to the contrary, Kathleen is entitled to reimbursement for her contributions to its acquisition to the extent she can trace it to a separate property source.  (§ 4800.1.) She has:  the property was originally hers.   She must then be reimbursed “without interest or adjustment for change in monetary values [for her] down payments ․ and [her] payments that reduce[d] the principal of the loan․”  (§ 4800.2.) Stated another way, Kathleen is entitled to be reimbursed for the equity she possessed, in the residence, at the time of the 1977 transfer:  it is that amount which represents her contribution to the property's acquisition.

The matter is remanded for a new hearing to determine the amount of principal reduction at the time of the 1977 transfer.   The judgment is reversed to the extent the property's sale proceeds were ordered divided equally between Kathleen and Felix.   In all other respects, it is affirmed.   Kathleen shall receive her costs on appeal.

FOOTNOTES

1.   All further statutory references are to the Civil Code.

2.   Section 4800.1, subdivisions (b)(1) & (2) provide:  “For the purpose of division of property upon dissolution of marriage or legal separation, property acquired by the parties during marriage in joint form, including property held in tenancy in common, joint tenancy, tenancy by the entirety, or as community property is presumed to be community property.   This presumption is a presumption affecting the burden of proof and may be rebutted by either of the following:  [¶] (1) A clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is separate property and not community property.  [¶] (2) Proof that the parties have made a written agreement that the property is separate property.”

3.   In re Marriage of Perkal (1988) 203 Cal.App.3d 1198, 250 Cal.Rptr. 296 says the same thing.   A spouse who during the marriage converts separate property to community is entitled to reimbursement.

4.   If we were to follow Rico, we would direct the trial court to:  “1.   Determine amount of each party's contribution toward purchase price of residence.  [¶] 2.   Calculate amount of appreciation from purchase price to date of conversion.  [¶] 3.   Calculate percentage of purchase price represented by each party's contribution;  multiply appreciation of percentage to obtain dollar figure.  [¶] 4.   Add each party's contribution to his or her percentage of appreciation (in dollars) to arrive at each party's total separate property equity in residence.”   (1992 Cal.Fam.L.Rep. 5535.)

5.   Indeed, pre-section 4800.4 cases relied on Code of Civil Procedure section 872.140 because that was the only option.   In In re Marriage of Leversee (1984) 156 Cal.App.3d 891, 203 Cal.Rptr. 481, the parties purchased real property prior to marriage, taking title as joint tenants, although the down payment was made from the wife's separate property.   The court held “a residence acquired in joint tenancy before marriage, ․ must be characterized as true joint tenancy property over which the court in a dissolution proceeding under the Family Law Act has no jurisdiction.   It can be divided only in a separate partition action.”   (Id. at p. 894, 203 Cal.Rptr. 481.)   In that “partition action the court may order” a section 872.140 reimbursement.  (Id. at p. 897, 203 Cal.Rptr. 481.)

SONENSHINE, Associate Justice.

MOORE, Acting P.J., and WALLIN, J., concur.