Frank Bonvino’s Appeal
Frank Bonvino based his appeal of the trial court’s decision on the contention that there was no evidence he transmuted his separate property to community property. By plain language of this statute, Family Code §2640 applies to separate property contributions that are traceable from a community property asset at dissolution. Section 2640 does not purport to apply to separate property used during a marriage to acquire an asset that retains its character as separate property. Thus, for Family Code §2640 to apply to a case, the asset purchased during marriage must be characterized as community property. Additionally, for separate property to become community, the transmutation provisions of Family Code §852 must be satisfied before 2640 can apply. Keeping this in mind, let us take a look at the ruling by the Court of Appeal.
The Court of Appeal’s Decision
On re-examination, the Court of Appeal reversed the trial court’s decision and concluded that the husband had not transmuted his separate property to community. Frank’s entire separate property funds could be sufficiently traced to overcome the burden of proof required by the presumption that all property acquired during the marriage belongs to the community. Furthermore, the document of title did not trump the conduct of the parties in determining the character of the property.
Other than the fact that the Westlake Village property was purchased during the parties’ marriage, the only evidence that the property was community was Dawnel’s testimony concerning a verbal agreement by the parties to add her to the title. For there to have been a transmutation, there must have been certain formal-ities to increase the certainty that a transmutation had occurred. For example, there must have been “an expressed declaration made, joined in, consented to, or accepted by the spouse whose interest in the property had been adversely affected.” (Section 852, subd. (a).) Therefore, a document must have been signed by the adversely affected spouse, which stated in clear and unambiguous terms that the character or ownership of the property at issue was being changed from separate to community. There were no documents presented to satisfy the requirement of section 852 to effect a valid transmutation of the husband’s separate property interest in the Westlake Village home. In fact, every document signed by Frank expressed that the Westlake Village property was to be his separate property. It was clear that Frank’s traceable separate property investment retained its distinct property character, and both separate property and community property interests were evidenced in accordance with the formula established in Aufuth and Moore.
The Court of Appeal agreed that the Westlake Village home had both separate and community property interests. This Court also ruled that Frank was not entitled to Family Code §2640 since the house was not fully community property and separate funds were used in the purchase and payoff of the home. Thus, not only had no transmutation taken place, the payoff provided Frank a substantial additional proportionate separate property interest in the home. This resulted in the Court of Appeal remanding that the trial court calculate the separate and community interests using the Moore/Marsden Formula. (See the above left column).
As stated in our previous newsletter, the amount of the loan taken out to purchase the Westlake Village property was $328,000, including closing costs. The separate and community interests were to bear pro tanto responsibility for the closing costs and prepaid items. These included the cost of the loan to complete the purchase in proportion to their ownership interests in the portion of the property purchased with the loan proceeds.
Although the Court of Appeal’s decision overturned Frank’s award through Family Code §2640, the home value approximately doubled from the time of purchase to the time of the dissolution of marriage. Thus, via the Moore/Marsden calculation, Frank’s share based on his down payment and payoff of the home resulted in an apportioned interest of the property.
As a result of this case, the precedence in real property apportionment calculations have significantly changed. If you have any questions concerning the findings of this case or the Moore/Marsden calculations, you are welcome to contact me.