Community Property Outline
I.
Development of the California Community Property System.
A. The Meaning of Marriage.
1. Lesson from Maynard v. Hill: Marriage is more than a K.
B. Marital property, an overview.
1. Common law states (42 states). All property is owned individually except the property agreed
to be held jointly
a. Most have adopted equitable distribution – the name of the legal title is not
determinative of ownership and the courts recognize material contributions towards the
acquisition of property, including homemaking, parenting, and general contributions to
the well-begin of the family.
1). Two general types: Divide all property owned by either spouse in order to do
equity to them at divorce, or division of marital property only (excluding gifts,
inheritances, etc.)
C. Development of the CA system.
1. CA is a Code state. Therefore, statute is FIRST PLACE to look for authority.
2. CA is community property state.
a. Cal. Fam. Code § 760 – “except as otherwise provided by statute, all property, real or
personal, wherever situated, acquired by a married person during the marriage while
domiciled in this state is community property.”
3. Dates to consider:
a. Date of Marriage: All property owned prior to the date of marriage is separate. Cal.
Fam. Code § 770(a)(1).
b. Date of Separation.
1). During period of separation, the “earning and accumulations of a spouse and the
minor children living with, or in the custody of, the spouse, while living separate
and apart from the other spouse, are the separate property of the spouse.” Cal.
Fam. Code § 771.
c. Date of Judgment. After entry of judgment of legal separation, the property is separate.
§ 772.
4. The process: To get started, a petition is filed.
a. From the onset of the process until the property is distributed, there is an all-permeating
fiduciary duty of the parties towards each other. The confidential nature of the marital
relationship “imposes a duty of the highest good faith and fair dealing on each spouse.”
§ 721(b).
b. FIRST STEP IN EXAM – sort between comm. prop. and separate prop.
5. Three principles of Community Property: Tracing, equality, and modification.
D. Tracing.
1. Property acquisitions are traced back to their original source to sort out community property
from separate property.
a. Property traceable to a primary community property asset is community property,
property traceable to separate property is separate.
1). Separate property of a married person includes . . . [t]he rents, issues, and profits
of the property described in this section.” § 770(a)(3).
b. George v. Ransom: Roots of the tracing principal. Wife bought stocks with separate
funds and husband’s creditor wanted them. Held: Cannot take the fruits of someone’s
property away from them. (1860).
E. Equality of interest.
1. Community property is family property in which both spouses have a “present, existing, and
equal interest.” § 751.
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a. Old rule: Stewart v. Stewart, wife did not have vested interest during marriage.
F. Married persons may modify the operation of the property through inter-spousal agreements.
EXAM – to get out of comm. prop., look for agreements.
1. PRE NUPS.
a. Also, prenup agreement cannot encourage dissolution. This is against public policy. In
re Marriage of Noghrey: agreement said that wife would get substantial amount of
money upon divorce, with no attempt to define the property or property rights.
b. A prenup with an incentive to stay together (i.e. get $1,000 after the first year, $10,000
after each subsequent year) is fine.
c. Lessons from Marriage of Bonds.
1). Fiduciary duty is not owed until after the marital relations being. During the
formation of the prenup, there is no such duty. § 721.
2). At the time, the lack of representation, which the CA SCt. found very persuasive,
was not given proper consideration (too much weight was given to this fact).
d. CURRENT LAW REGARDING REPRESENTATION: A premarital agreement is not
executed voluntarily unless the party against whom the enforcement is sought was
represented by independent legal counsel at the time of signing or, after being advised
to seek independent legal counsel, expressly waived, in a separate writing,
representation by independent legal counsel. § 1615(c)(1).
1). There is also a required seven day period between presentation of the agreement
and the signing. § 1615(c)(2).
2). If unrepresented, party must be fully informed of the terms and the effect of the
agreement, and must be proficient in the language. The explanation of the rights
and obligations must be in a writing and delivered to the party prior to signing the
agreement. § 1615(c)(3).
2. TRANSMUTATIONS: Spouses can change the nature of the property. Historically, CA had
very easy modifications (pillow-talk transmutations). NOW, signed writing is required.
§ 852(a).
a. In order for there to be a valid transmutation, there must be an “express declaration.”
§ 852(a).
b. MacDonald case: The property was given to another. This was sufficient for an
express declaration.
c. Estate of Bibb: The property was granted to the wife and son. Grant is the same as
gift, and was held to be sufficient.
1). However, a quit claim deed might not be sufficient.
d. For this requirement, only the deed is proper evidence. There cannot be extrinsic
evidence of secret desires, etc.
3. Other requirements.
a. After there is a writing, look to see if the party asserting a right has gained an unfair
advantage.
1). If there is no advantage then it doesn’t matter.
2). I.e. Burkel: Two litigants worked out a settlement while still married with
reconciliation as its motivation. Later, wife did not like the deal she got and
wanted it set aside. Held: Even if there was an advantage, it was bargained for,
and thus not unfair.
b. If there is an advantage, there is a presumption of undue influence.
1). This emanates from § 721 as interpreted by the case law.
2). Mediation is insulated from the presumption. Kieturakis. Reason: Mediation
cannot enter in trial and if the presumption has to be rebutted, it would have to be
through testimony about what happened in mediation. This does not work.
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II.
c. The burden then shifts to the asserting party to show by preponderance of the evidence
that the spouse entered into the agreement of their own free will.
d. If not real property, look to the value of the property in relation to the circumstances of
the marriage. § 852(c). If it is substantial in value in comparison, it is comm. prop.
1). Marriage of Steinberger: Diamond valued at $13-14K, husband set it in a ring
for wife. There was no writing transmuting it and the ring was substantial in
value compared to the circumstances. Held: Community property.
The Classification of Property as Community or Separate.
A. Presumptions.
1. Acquisition during marriage = community.
2. Acquisition by gift, inheritance or testamentary position = separate.
a. Wilson v. Wilson: Presumption of community property during marriage is strong.
b. Estate of Jolly: Evidence that property held by widow at her death was community
property because wife had never worked, had not received a gift or inheritance. There
was no way the wife could have acquired the property on her own.
3. To overcome the presumption, the burden of proof is preponderance of the evidence (51%).
a. Freese v. Hibernia Savings and Loan Society: The proceeds of the sale of wife’s two
parcels of land were put into an account, the amount at issue in the suit was clearly
traceable to those funds.
B. Common statutory presumptions respecting separate property.
1. When the right arises is important for determining whether it is separate or community. If the
right arises prior to marriage, it is separate, even if not realized until after marriage.
a. Estate of Clark: Father died and son, Dillard, challenged the will. Prior to filing suit,
however, son married. After marriage there was a settlement. Upon son’s death, his
wife claimed the settlement was comm. prop. Held: It is separate property because the
right vested at the time the father died, which was prior to marriage, and the right was
legitiamte.
b. Compare with Pancoast: Here, a trespasser was on land. He then married and then
reached a settlement with the rightful owner of the property for a deed of the property
on which he was trespassing. The deed was comm. prop. because there was no
legitimate right which vested prior to marriage.
2. Downer v. Bramet: During period of separation, husband acquired an interest in real property
from his employer. Although the interest looked like a gift, the court held that it was in
recognition of his hard work and in lieu of retirement benefits. It was a remuneratory gift and
thus community property.
3. When looking at the date of separation, the date a spouse moved out is not dispositive. TEST:
Whether the parties considered the rift in their relationship to be final.
a. In re Marriage of Hardin: Although husband moved out, they did not legally dissolve
the marriage until 14 years later. During that time, the economic relationship did not
change, they acquired property together, the husband still received mail at the wife’s
house, and the wife was a corporate officer in the family business.
4. There can only be one date of separation. So even if there is a default divorce and the spouses
reconcile, the time between the default divorce and reconciliation is still not considered a
period of separation.
C. Special presumptions based on the form of title.
1. Acquisitions by a married woman.
a. When any real or personal property was acquired before 1/1/75 by a married woman by
an instrument in writing, there are presumptions that: 1) if acquired by the married
woman, it is her separate property, 2) if acquired by a married woman and any other
person, the married woman takes the part acquired by her as tenant in common unless
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there is a different intention expressed in the instrument, and 3) if acquired by husband
and wife it is community property. § 803.
b. Horsman v. Maden: H & W had securities, W made H sign them over when he was
caught cheating. The two never divorced and H made a will saying that all property
was comm. prop. Held: The presumption of separate property is rebuttable and there
was evidence that H never intended to gift the prop. over to her.
c. In re Marriage of Ashodian: W had real estate dealings, acquired and sold properties.
H did not want to be bothered with it.
1). In order to rebut the presumption of separate property, factors to consider: lack of
an agreement to transmute the property, H had no intention of making a gift, W
used comm. prop. funds but H did not intend to make a gift, W used comm. prop.
funds to purchase property in her own name without H’s knowledge.
2). Here, H knew of the business and didn’t want anything to do with it. Held:
Sufficient evidence that H gifted prop. to W.
2. Concurrent Estates.
a. Section 750 – H and W may hold property as joint tenants, tenants in common, comm.
prop. or comm. prop. with a right of survivorship.
1). Estate of Levine: Old rule that the characterization of the property is as set forth
in the deed, even when bought with sep. funds or with evidence that the couple
meant for it to be sep.
b. Section 2581 PRESUMPTION that property acquired during marriage in joint form
(tenancy in common, joint tenancy, tenancy by the entirety, or comm. prop.) is TO BE
COMM. PROP.
1). Can be rebutted with clear statement in the deed or other document that it is sep.
prop.
2). Proof of sep. writing.
c. Section 2640:
1). In re Marriage of Lucas: W put separate property money into the house but
court held that she could not get division of property reflecting her sep.
contributions. There was no agreement that it would be separate and thus there is
a presumption that the separate contribution was a gift to the community.
2). Section 2640 party will be reimbursed for separate contributions to the acquisition
of property.
a). Contributions include down payments, payments for improvements and
payments that reduce the principals of a loan.
b). The amount reimbursed is without interest or adjustment for change in
monetary value and cannot exceed the net value of the property.
c). Under this rule, Lucas would be decided differently.
III. Limitations on the Classification Process.
A. Property within the system.
1. Education.
a. Todd v. Todd: The word “property” does not include every property right acquired
during marriage.
1). Held: Law education is not community property but the law firm is.
b. Section 2641 the community is entitled to community contributions to education that
substantially enhances earning capacity. Interest is included.
1). Student loans are NOT included.
2). There is rebuttable presumption that the community has NOT benefited from
contributions made less than 10 years before the commencement of the
proceeding.
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c. In re Marriage of Watt: Contributions include things connected to the education (like
tuition, fees, books and special living expenses).
1). Contributions must be shown to be related to the education. They were not here
so W could not recover.
2). Also, W could not get retraining expenses because her income was equivalent to
what she would make in the profession she wanted to switch to and she did not
exhibit need because her expenses were equal to her income – even if just getting
by, this is enough.
2. Good will.
a. Good will is defined as expectation of future patronage (only in relation to a business)
b. How is Goodwill turned into a money ($) figure?
1). Excess Earnings Method (below) – look at business and compare it to other
businesses similarly situated (i.e. Nordstrom to Saks or Neiman) – question of fact
for court “Did expert rely upon ‘matter’ or data which is relevant to use for
comparison?”
c. In re Marriage of McTiernan & Dubrow – 133 Cal.App.4th 1090 (2005)
1). Husband’s standing as famous / successful director is not “goodwill” because he
is not a “business” as statutorily defined (an entity not a natural person).
2). Personal reputation not transferable or divisible, so its not property when
attached to a person (as opposed to an entity, then its ‘good will’)
3). Excess Earnings: “comparison of the earnings of the professional in question
with that of a peer whose performance is ‘average.’” (133 Cal.App.4th at 1095)
4). What is goodwill and what is not? What property is w/in community
property gravitational field – there is no such thing as “personal good will” –
if you can’t transfer it, it doesn’t exist. If all u have to sell is your ‘labor’ that
is not property, its something called ‘earning capacity.’
5). The answer? Spousal Support (§4320) – the conversion / convertable, all of
that which otherwise would be ‘good will’ would be earning capacity which is
considered this and prior standard of living when setting up spousal support.
Can set it at a level consistent with matiral standard of living and the earning
capacity and set a very high support. But you have to hope he doesn’t get
indicted and he is not making that kind of money, he will come back to
modify support.
d. In re Marriage of Lopez: (this is taken out / replaced by the case listed above) Good
will of H’s law firm was determined to be comm. prop.
1). Valuation – Excess earnings method: expert looks at the business and does
comparisons (to other like law firms/practices, etc.) and factors like fixed assets,
accounts receivable, work in progress and/or not billed.
2). Here valuation wasn’t an issue because the firm’s good will was given a value
when a portion of it was sold.
e. Good will must be tied to a business. Personal good will is not considered.
1). Excess earnings analysis on Iredale and Rosen each make more money than
average attorney who does “what they do.”
2). Derek Jeter v. another short-stop for another team (salary discrepancy  goodwill)
3. Insurance proceeds.
a. In re Marriage of Spengler: Employment-related term life insurance policy is a comm.
prop. if paid for with comm. funds or earned during marriage. However, the right to
renewal of the policy is not a comm. prop. asset because it is a mere expectancy.
1). Expectancy is an interest of a person who merely foresees that he might receive a
future benefit. In this case, the employer is not forced to continue providing
benefits.
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B. Persons within the system.
1. There is no same-sex marriage in CA but there are recognized domestic partnerships. (Section
297) (pg. 157-158)
a. Marriage Cases – §300 and §308 (you have to be of opposite sex to get married)
b. Although I think that this section should be read (in re marriage)
c. List of factors relied upon by appellate court and by the supreme court – two things:
1). Court of appeal case – fundamentally is the right to same sex marriage a
fundamental right? The right to die (generally) and assisted suicide, they are not
the same thing…they conclude same sex marriage is not ‘deeply rooted’ in
traditions, not implicit, etc… claims are “doomed” because same sex marriage is
not a fundamental right.
2). Dissent in supreme court (jusice klien) – msg to the supreme court – the right to
marriage can’t be taken from deadbeat dads, spousal abusers, etc… yet gay men
and lesbians are not allowed.
d. California supreme court concludes – privacy and due process provisions in the state
constitution guarantee the civil right of marriage regardless of sexual orientation.
Careful as California supreme court has done historically, resting their decision on state
provisions of constitution on due process, equal protection, and not on federal, why?
Basing it on the state constitution; it insulates the decision because they are interpreting
THEIR constitution and not the US constitution.
e. Proposition 8 on November ballot – is the initiative to amend constitution of California
to read “only marriage between man and woman will be recognized in California…
2. Putative spouses.
Void vs. voidable marriage –
- Void marriage is one that is void and invalid from its beginning. It is as though the marriage never
existed and it requires no formality to terminate
- In law, a transaction or action, which is voidable, is valid, but may be annulled by one of the parties to
the transaction.
- Family Code Section 2200 (incensuous) – void
- Family Code Section 2210 (annulment) – voidable
a. Defined as someone who believed in good faith that the marriage was valid. § 2251.
1). Good faith is a question of fact
a). Have to try to go through legal system to validate marriage in state where
you are trying to get married
2). Quasi-marital property
3).
b. Coats v. Coats: H wanted marriage annulled arguing wife was not physically capable
of entering into marriage. W had a good faith belief. Therefore, marriage was valid.
c. Good faith – must try to go through the procedures the state has set up to make marriage
official.
1). For instance, if try to do the solemnization procedure but do not get a license, this
is not sufficient to meet the good faith requirement.
d. Estate of Leslie: A surviving putative spouse gets a share in the decedent’s sep. prop
(like a legal spouse would).
e. Estate of Hafner: Upon H’s death, ½ of his estate went to putative spouse and ½ to his
legal wife.
f. Velez v. Smith 142 Cal. App. 4th 1154 (2006)
1). Plaintiff and defendant, a lesbian couple, filed a declaration of domestic
partnership with the City and County of San Francisco in 1994. In November
2004, defendant filed a notice for ending the partnership in San Francisco, and on
December 6, 2004, plaintiff petitioned for dissolution of domestic partnership.
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The trial court granted defendant’s motion to strike plaintiff's petition. (Superior
Court of Mendocino County, No. SCUK-CVFL-04-93698, Eric Labowitz, Judge.)
2). The Court of Appeal affirmed the judgment. As an initial matter, the court found
that the trial court properly limited the inquiry on the motion to strike to the
pleadings and affidavits, which incorporated evidence of defendant's notice of
termination. On the merits, the court found that plaintiff was not eligible to
proceed with the dissolution action under the California Domestic Partner Rights
and Responsibilities Act of 2003, which extends many of the rights and duties of
marriage to persons registered as domestic partners on and after January 1, 2005.
The court reasoned that the couple did not register their partnership with the
California Secretary of State pursuant to Fam. Code, �298.5. Local law and the
Domestic Partner Act are not equivalent; compliance with one is not compliance
with the other. Further, defendant's notice of termination effectively terminated
the relationship that existed before the operative date of the Domestic Partner Act.
Because the partnership was not registered, retroactive application of the
Domestic Partner Act would have been of no benefit to plaintiff, and plaintiff was
not a “former” domestic partner under Fam. Code, �297.5, subd. (d). The court
declined to apply the putative spouse doctrine in the domestic partnership context.
(Opinion by Swager, J., with Stein, Acting P. J., and Margulies, J., concurring.)
3). PROCEDURAL POSTURE: Appellant and respondent, a lesbian couple, filed a
declaration of domestic partnership with the City and County of San Francisco in
1994. In November 2004, respondent filed a notice for ending the partnership in
San Francisco, and on December 6, 2004, appellant petitioned for dissolution of
domestic partnership. The Mendocino County Superior Court, California, granted
respondent's motion to strike appellant's petition. Appellant sought review.
4). OVERVIEW: As an initial matter, the reviewing court found that the trial court
properly limited its inquiry to the pleadings and affidavits, which incorporated
evidence of respondent's notice of termination. On the merits, the court found that
appellant was not eligible to proceed with the dissolution action under the
California Domestic Partner Rights and Responsibilities Act of 2003, which
extended many of the rights and duties of marriage to domestic partnerships
registered on and after January 1, 2005. The court reasoned that the couple did not
register their partnership with the California Secretary of State pursuant to Fam.
Code, �298.5. Local law and the Domestic Partner Act were not equivalent;
compliance with one was not compliance with the other. Further, respondent's
notice of termination effectively terminated the relationship that existed before the
operative date of the Act. Because the partnership was not registered, retroactive
application of the Act would have been of no benefit to appellant, and appellant
was not a “former” domestic partner under Fam. Code, �297.5, subd. (d). The
court declined to apply the putative spouse doctrine in the domestic partnership
context.
5). OUTCOME: The court affirmed the judgment.
g. Vallera v. Vallera: There was not a good faith belief by either party that the two were
married (woman knew that man was married). Therefore, upon breaking up, the woman
has no interest, even as tenant in common.
1). There is no common law marriage in CA.
2). Even thought W divorced H, neither H nor his GF knew.
h. Marvin v. Marvin: Π and Δ were never married but Π argued that Δ had made an oral
agreement that while they lived together they would combine their earnings and efforts
and share equally in all the property acquired.
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1). Family Law Act not applicable here because there was no marriage.
2). Nonmarital people can K as to property rights as long as the agreement is not
meretricious (prostitution – sex for money).
a). Look for express K and enforce it.
b). If no express K, look to the parties’ conduct to determine if there was an
implied K.
c). Court may also use theory of quantum meruit or other equitable remedies
like constructive trust.
d). Δ also argued that giving Π rights to his prop. would destroy his legal W’s
prop. rights. However, the two were divorced and W did not assert her
rights during the divorce proceeding.
e). This was not a marriage settlement (which is made in contemplation of
marriage) nor was it connected to a breach of a promise to marry.
3. Domicile requirement.
a. Rozan v. Rozan: Property acquired by couples domiciled in CA, even if the property is
located outside of CA, is governed by CA law.
1). Here couple bought land in N.D. during marriage. The N.D. land was determined
to be comm. prop.
b. Grappo v. Coventry Financial Corp.: The law of the state in which the couples were
domiciled at the time of the acquisition is the law that governs.
C. Constitutional limitations.
1. Retroactivity problems:
a. Family Code Section 4 – all family law changes in the law in the family coe or new
laws are considered to be retroactive unless stated otherwise.
b. Spreckels v. Spreckels: Held that a law denying H the right to make a gift of comm.
prop. was unconstitutional as to property acquired prior to the law’s effective date.
Announced principle of non-retroactivity.
c. In re Marriage of Bouquet: Here, § 5118 was held to be retroactive and retroactivity
was not unconstitutional.
1). There is a presumption that laws are not retroactive.
a). This was rebutted in this case with legislative intent.
2). Retroactivity was not a problem here because the old rule was so unfair. Old rule
was that during separation, H’s earnings and accumulations were comm. prop. but
W’s were not.
d. In re Marriage of Heikes: Old rule was that if separate prop. was used to purchase
property during marriage and that property was taken in joint tenancy, it became comm.
prop. This rule was changed by § 2640. However, no retroactive application here –
only applies to property acquired after 1/1/84.
2. Quasi-community property:
a. Section 125 defines quasi-comm. prop. as property acquired before or after the
operative date of this code by either spouse while domiciled elsewhere which would
have been comm. prop. if the spouse who acquired the property had been domiciled in
CA at the time of its acquisition OR if exchanged for property, would have been comm.
prop. if the spouse who acquired the property so exchanged had been domiciled in CA
at the time of its acquisition.
3. Reaching property in other states:
a. Addison v. Addison: CA courts may change the character of property acquired before
domicile in CA if:
1). The parties change their domicile to CA AND
2). File in CA court to change their marital status.
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a). Note: Only one party has to initiate the legal proceeding to alter marital
status. Fransen v. Fransen.
3). This is not a P&I or DP violation because the property does not change as soon as
the couple crosses into CA. It is the availing to CA courts to change status that
triggers the change.
b. In re Marriage of Roesch: Court erroneously applied CA law. This was incorrect
because W still lived in PA.
4. Supremacy Clause.
a. Wissner v. Wissner: The National Service Life Insurance Act stated that servicemen
could designate the recipient of life insurance proceeds. This goes against comm. prop.
ideas if the W is not the beneficiary.
1). Held: Federal law preempts state comm. prop. laws.
b. Boggs v. Boggs: Held that ERISA preempts state law.
IV. Selected Problems in Classification.
A. Commingled funds – when separate property funds and comm. prop. funds are mixed.
1. PRESUMPTION: Comm. prop. funds are used to pay comm. prop. expenses.
2. PRESUMPTION: Prop. acquired during marriage is comm. prop.
3. Tracing: There are two methods of tracing funds to sep. prop.
a. Family expense method: Test is whether comm. expenses exceeded comm. funds at the
time of acquisition.
1). See v. See: H had 2 accounts with commingled funds. He purchased assets with
one of them and later argued that the assets were sep. prop.
a). RULE: In order for H to be able to show that the prop. is sep., he must
show that at the time of acquisition, comm. expenses exceeded comm.
funds.
b). In this case, H tried to show that the net comm. funds were less than the
expenses. But he did not keep adequate records to show the financial
situation at the time of acquisition.
b. Direct tracing: Show the sep. source and intent to buy sep. prop. with the sep. funds.
1). In re Marriage of Mix: W presented as evidence schedule of sep. funds,
expenditures of sep. money, and that there was always a balance in the sep. prop.
account.
a). Note: W also won here because she was more convincing. She testified as
to the accuracy of the schedule and the judge believed her.
2). In re Marriage of Frick: H had a hotel and received rent that was sufficient to
cover the deed payments for the property. However, the account that he received
rent into also had comm. funds. Held: The deed payments were from comm.
funds.
B. Business profits.
1. The typical situation is a spouse who has a pre-existing business and then gets married and
continues working at the job. The business is sep. prop. but the work that goes into the
business (the blood, sweat and tears) is comm. prop. If there is an increase in the value of the
business at time of separation, how is the increased value apportioned between the efforts put
into it by the spouse and the natural increase of value.
2. Pereira method.
a. Figure out the reasonable rate of return on the prop. and then everything left over is
comm. prop.
b. Pereira v. Pereira: The parties stipulated a 7% rate of return. The parties then figured
out the value of the property over time to come up with the sep. prop. value. The
remainder was comm. prop.
3. Van Kamp method.
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a. Figure out the comm. prop. contribution first and then everything left over is sep. prop.
b. Tassi v. Tassi: H was in meat trade and made substantial profits during WWII. The
court figured out the H’s salary and then everything else was considered sep. prop.
1). Court here also looked to the fact that many of H’s customers were there prior to
his marriage, so there wasn’t comm. effort put into this.
4. Marriage of Koester: H had a business prior to marriage but incorporated during marriage.
The incorporation during marriage was not did not transmute the property from separate to
comm.
a. Good model for exam question
b. If I take separate property money, 2581, when I get to divorce cout, the separate
property money that went into community property, the portion that was separate
property remains separate, the rest is community property (Trojan horse)
c. 2640 right to reimbursement
d. Marriage of Witt – even if u testify that you intended to make a gift of pinkacre to
community property (did not intend to retain it as separate property) – you haven’t lost
your initial separate property interest UNLESS under 2640 you create a separate
writing which says that.
e. Just because you change identity of business, that is not a transmutation, indeed, you
can simply apply or objectively apply criteria that must be place for a transmutation to
occur, hen u have to look at writing and the incrporation documents (I.e. articles of
incorporation, etc…) must say person understands characer ofwnership of business;
merely by incorporation the business the language is not there.
f. Transmutation vs. not and applying either van kamp method or Pereira, this is big
difference money wise
1). If lower judge was right and valid transmutation, THEN 2640 would apply and if
it’s a valid transmutation, all post-marriage increase in value would go into
community property. If you don’t have a valid transmutation and use perierea
approach to valuation of increase in value of business, then husband gets the
major chunk as return on his investment and community gets a much smaller
piece of the pie.
2). IF 2640 even applied to a business (does it even apply? Or is it only inc ase of a
residence)
5. In re Marriage of Imperato: Issue was when the business is valued. Court says you value the
property as close to the date of trial as possible.
a. Although H had been working at the business from the date of separation to the date of
trial, this did not matter. However, case was remanded to determine if the money from
the business could be considered earnings, which would be solely H’s.
b. Date of separation (hardin case) – determined by judge based upon looking at all
objectiv facts and then deciding from his POV when was it that at least one of the
parties decided the marriage is finally over.
1). Value of company jumps from 2k to 17k after date of separation
c. Date of judgment
d. Date of Judgment
e. CP asset that after DOS, goes up in value, that means after DOS husband is pumping in
‘separate property labor’ into the community property asset and that b/c of this all
interest should be treated as separate property (the increase post DOS); appellate court
reasoned rule – the default rule is that judge is going to value CP as close as practicable
to the date of trial.
f. If you are atty and its not to advantage to value as date of trial (and want to have it
valued at DOS) – say if you wanted to have court deviate from default rule, or some
other date, (usually DOS is backup), what can you do? You file a motion at least 30
10
days before the trial date to have the court value the proerty on alternate date, (motion
for alternative evaluation date). If you are representing the “other” side that may not be
advantageous to have this alternative eval. Date used – CP businesses spin off CP
income, husbands who continue to work in the business, their labor under 771 their
earnings and their accumulations are separate property. Distinguish between increase in
value of business that is CP and the earnings of husband who continues to work in the
business righteously earns (b/c the second is not CP), profits from business that is CP is
also CP – that leads to increase in value of business…
g. Increase of business and profit; goes back to problem – just because husband is
continuing to work the business, does appellate court say they are going to treat
everything that was generated (all income) as separate property income? NO – send it
back down on the alter ego theory, they are saying basically –
h. LOOK you can’t disreard the CP entity as carrying forward after DOS, there is a CP
inerest in the business and there are a lot of factors that generate an increase in value. If
you have a person working the business after DOS on a CP business, then you’re just
gonna do a reverse / inverse van kamp / periera approach. Instead of figuring out
reasonable return should be on a pereria analysis, you do a pereria ansalsys on he CP
property and the rest given as SP and that’s how the increase in value, etc… the van
kamp approach you what is value of separate property labor, and rest of increase is CP.
i. Case was remanded – back up argument – basically a sole properietorship w/ alter ego
/ let me go back to trial court and (lopez case) – go back and say look at corp. enity that
was a bunch of crap, no actually corp. entity and that its income / earnings all the way
through, and everything belongs to “me.”
C. Installment and Credit Acquisitions.
1. Installment acquisitions.
a. Vieux v. Vieux: Property was purchased, with H paying a portion prior to marriage and
the comm. making payments during marriage. Held: Comm. entitled to an interest
proportionate to the amount contributed.
2. Loans.
a. Gudelj v. Gudelj: H got a loan to buy a ¼ interest in a cleaning business. In securing
the loan, H argued that the lender must have relied on property H owned with his
mother. Held: In looking to whether the loan is comm. or separate prop., look to the
intent of the lender. If the loan is secured during marriage, there is a presumption that it
is comm. prop. To overcome this presumption, the party must show that the lender
relied on sep. prop.
b. Bank of California v. Connolly: Loans were secured by the personal credit of H and
W. However, the bank also secured one of the loans with separate prop. There was
testimony though that the separate prop. was used only to comply with bank regulations
and that the lender relied primarily on the general credit of H and W.
c. In re Marriage of Grinius: In order to prove separate prop., party must show that the
lender relied solely on separate prop.
1). In this case, H could not meet the burden. Even if some separate prop. was
considered, comm. prop. was also considered.
No lender is going to come to court and testify that they relied on anything other than “everything” (i.e. not
going to say they only relied on ‘separate property’)…these cases are interesting but really are just jumping off
spot to get us off to moore case. In California, you assume that monies that are loaned which are ACQUIRED
are treated as CP unless the burden of proof by proponderance of evidence can show that some lender relied
TOTALLY upon separate property in making the loan. Maybe you can find these facts, but even if property
that is put up for security is SP, the lender is still going to say that they relied on earning power of both parties.
3. Post separation appreciation.
11
MOORE MARSDEN RULE -- arriage of Moore, 28 Cal. 3d. 366 (1980)). The approach, further clarified in the
Marriage of Marsden 130 Cal. App. 3d 426 (1982
a. In re Marriage of Moore: In looking to the value of the property and how appreciation
is to be apportioned, courts must consider the extent to which separate contributions
reduced the purchase price, and to what extent the comm. contributions reduced the
purchase price.
1). Payments made for insurance, taxes and interest do not count.
2). W’s interest was the down payment, and the loan she took out with sep. property.
Accordingly the community interest would be found by (1). Dividing the amount by which the community
property payments reduced the principal balance of the loan by the purchase price then (2). Multiplying that
community percentage interest by the equity value of the house to find the capital appreciation due to
community funds and (3). Adding to that the amount of equity paid by community funds.
- When I go out to buy property, down payment – if you are also going to borrow money to ‘pay the
difference’ your’e on the hook for the loan. Loan proceeds go from lender to the seller… that was “your
money” that went to seller that was acquired via the bank.
- You have 100k down payment, 400k loan
o If property is now worth 1 million (you’re married sometime in between…)
o Lets assume on day 1 – property is purchased for $500k
o One year later, property is worth $1million dollars
o The 500k in appreciation belongs to the buyer, its nothing but separate property invested in it…
o NOW lets assume that you get married and over next 10 years it goes to one million dollars, and
CP dollars to pay for mortgage, etc…over the court of 10 years – the loan is paid down on
principal amount of the purchase price. $100k of principla is paid via CP dollars so that the CP
interest reduces the separate property interest because it was 400k separate property loan, CP
dollars have reduced that to 300k SP obligation. SP interest is gone down to $400k (100k down
payment and 300k loan which is left, 100k of CP monies). Necessarily, since loan has been
reduced by CP dollars, SP interest has been reduced. CP has 100k, SP has 400k interest…
relationship is now 1 to 4 or 20% to 80% (i.e. 1/5 is CP), how does this get divided up between
CP and SP when house appreciated… answer is 20% and 80% (so if house is worth 1 million, SP
would get 800k, and CP would get 200k)
b. In re Marriage of Frick: The sep. and comm. contributions to the purchase price is
what is important, not the fmv.
4. In re Marriage of Walrath: The sep. contributions can be traced not only to the original prop.
to which the sep. contribution was made, but also to all other assets subsequently acquired
from the proceeds of the initial prop.
a. Here, H’s 88% sep. prop. interest was traced to other properties.
D. Improvements.
1. In re Marriage of Wolfe: When a spouse contributes comm. funds to improvements on their
spouse’s sep. prop., the contributing spouse is entitled to reimbursement. There is no gift
presumed.
2. In re Marriage of Smith: Old rule that sep. prop. contributions to comm. prop. were
presumed to be gifts unless expressly stated otherwise. Overruled by statute.
E. Personal Injury Damage Awards.
1. SECTIONS 780 and 781. Money and other property acquired through personal injury
judgment is comm. prop. if the cause of action for the damages arose during marriage. It is
sep. prop. if the cause of action arose after dissolution or while the spouses are living separate.
2. SECTION 2603. Although characterized as comm. prop., the PI damages are assigned to the
injured party unless justice supports a different result.
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3. In re Marriage of Devlin: H suffered serious injury during marriage and received damages.
The money was used to buy property. W contends in disso. that the rule should only apply to
the money or property actually awarded, not to property subsequently purchased. Court rejects
this.
a. Even if the court, in equity, decides to award the non-injured spouse some of the PI
damages, the amount cannot exceed 50%.
F. Employment Related Benefits.
1. Retirement benefits.
a. Benefits after employment, the issue is what is and is not comm. prop.
b. Deferred compensation for services rendered during marriage – pension.
c. Benefits after employment to compensate for lost wages – severance pay.
d. Retirement plans:
1). Defined contribution plan – employer and employee contribute every month and
there are individual accounts per employee. Total value is easy to figure out.
Also, comm. interest is easy to figure out.
2). Defined benefit plan – contribution is not the focus. The benefit received is the
result of a number of factors.
a). Usually, take the # of years contributed to the plan, age at retirement, last
year’s salary divided by a denominator.
e. Vesting: In a defined benefit plan, vesting is when the employee has a right to receive a
benefit in the future. The right cannot be taken away because of discharge or voluntary
termination, employer cannot unilaterally repudiate.
f. Maturation: When all conditions precedent to receiving the benefits are met.
g. Pay status: When there is vesting and maturation.
h. In re Marriage of Brown:
1). OLD rule was that a nonvested pension was a mere expectancy to which there
was no right. It was the interest of a person who might foresee that he might
receive a future benefit.
2). Under CA, the right to the pension is a contractual right, which is a property
interest. Therefore, even without vesting, maturity or pay status, there is still a
property right.
3). TIME RULE – The number of months the parties were married, divided by the
total amount of time the spouse worked and was in the pension plan. The total is
then divided in 2 for the comm. interest.
4). QDRO: Qualified domestic relations order. Tells the retirement plan
administrator how the benefits are to be divided.
i. In re Marriage of Bergman:
1). Cash out method – the entire interest at its present value is awarded to the
employee spouse and offsetting assets are awarded to the non-employee spouse.
2). Division in kind – The community interest in the plan is divided between the
parties and the plan. When benefits become payable, separate payments are made
to the spouses based on their proportionate interest.
a). This usually just means dividing the plan according to the time rule.
b). Preferred way is to do this (100 apples, give 50 to each)
j. In re Marriage of Gilmore: When the plan reaches pay status, the employee spouse
may continue to work, but must compensate the non-employee spouse for the money
he/she would be getting if the employee spouse had retired.
1). Reason: If the employee spouse could continue working indefinitely without
compensating the non-employee spouse, it impairs the non-employee spouse’s
right to their interest in the pension.
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V.
k. Marriage of Lehman: H worked for PG&E and had a defined benefit plan. He then
got an enhancement of that plan. H argued that W did not have an interest in the
enhanced plan.
1). Held – nonemployee spouse has right to enhanced plan. The enhanced plan is a
modification of the benefit plan, not creation of a new plan.
l. In re Marriage of Hug: H got stock options for Amdahl after leaving employment with
IBM. Court used the time rule, using the date he started working at Amdahl. H wanted
the date when the stock options were offered.
1). Whether stocks are compensation for past services, future service or both depends
on the circumstances involved in the granting of the option.
2. Disability benefits.
a. Marriage of Elfmont: If a spouse has disability insurance and continues to renew the
insurance after date of separation, the community no longer has an interest and any
proceeds are the separate property of the insured spouse only.
1). This is true even if the comm. made premium payments.
2). The community will have a right, however, if the disability insurance was meant
to provide retirement income instead of just to compensate for lost wages.
b. Life insurance and disability insurance are different because life insurance is to benefit
someone other than the insured while disability is to benefit the insured only.
3. Termination and other employment related benefits.
a. Marriage of Gram: In determining if a benefit is sep. or comm. prop., what matters is
if the benefit is meant to be deferred compensation for services rendered (comm. prop.)
or if it is present compensation for loss of earnings (sep. prop.)
Spousal Management and Creditors’ Rights.
A. SECTION 721: H and W are subject to the general rules governing fiduciary relationships which
control the actions of persons occupying confidential relations with each other. They owe each other
a duty of the highest good faith and fair dealing.
1. The fiduciary relationship continues until the property is actually divided and delivered.
B. SECTION 1100(b), (c), 1102: A spouse may not gift, dispose of, sell, convey or encumber comm.
prop. without the written consent of the other spouse.
1. Also, if a spouse is operating or managing a business, they cannot act alone in a transaction if
it involves the sale, lease, exchange, encumbrance or other disposition of all or substantially all
of the business property.
C. SECTION 1101: If there is a breach of the duty, then the court may order an accounting of the
property and obligations of the parties to determine ownership in, beneficial enjoyment of, or access
to comm. prop.
D. Spousal Management.
1. Tyre v. Aetna Life Insurance Co.: H had a life insurance plan that was converted into an
annuity during marriage but without W’s consent. H died and W found out about the change.
a. W has an election between what H has given her or her comm. interest. Here, she
wanted ½ of the lump sum (life insurance). She could not then also get the other ½ as
an annuity.
2. Marriage of Stitt: W got caught embezzling money. Although some of her atty’s fees were
paid for by the comm., W was on the hook for the rest of it after date of separation.
a. The creditor must go after the W’s sep. prop. first, then can go after comm. prop.
b. W will have to reimburse the comm. for the amount taken by her creditor.
c. In this case, there was no evidence that H benefited from the embezzlement. If he had,
then he would be liable for settlement of the debt, too.
3. Marriage of Duffy: H entered into a series of transactions with the IRA he got upon severance
from RCA. W knew a bit about the transactions, but not everything. Court held that W did
not inquire enough about the transactions so there was no breach of full disclosure by H.
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a. The court also looked to other duties that H might have breached. The court says there
is no duty of due care (what a prudent investor would have done).
4. Negative assets – if there is more comm. debt than comm. prop., the court has discretion in
dividing the debt. If the debt is more one spouse’s fault than the other, that spouse at fault
could get all or most of the debt.
5. Wilcox v. Wilcox: H and W still married and H sues W for interfering with his right to control
the marital property. Court allows the action. Do not have to file for dissolution to sue your
spouse.
E. Recapture and reimbursement proceedings.
1. Spreckels v. Spreckels: H gifted comm. prop. to 2 of his 5 children without W’s consent.
However, when W made her will, she left her prop. to the other 3 children and specifically
excluded the 2 children who received H’s gift. Court said this indicated consent to the gift.
2. Estate of Wilson: H created 10 trusts for his children without W’s consent. W got ½ interest
in each trust.
a. Rule – nonconsenting spouse is entitled to comm. prop. interest in each asset. Although
the trusts put together were less than ½ of the overall comm. assets, court says look at
each individual asset.
3. Droeger v. Friedman, Sloan & Ross: H and W were getting a dissolution but then decided to
stay together. W had put a lien on the comm. prop. in order to pay for atty’s fees. Court held
that if a transfer or encumbrance is without consent of the other spouse, the transaction is
totally voidable.
a. This case was subsequently overruled by § 2033, which states that spouse may put a
lien on prop. for family law atty’s fees. This allows the poorer spouse to present a
better case.
4. Lezine v. Security Pacific Financial Services, Inc.: H unilaterally transferred a security
interest in comm. prop. to lenders. W sued H and the lenders and the lenders crosscomplained against H and won at trial. The judgments were recorded. W eventually got the
liens cancelled but the prop. was still encumbered by the judgments. These judgments were
allowed to stand.
a. They cannot cash in their deeds on the house, but they have a judgment against the
husband and the abstract of judgments on the property. Thus, creditor who loses
security inerest in 1102, retains rights of any other unsecured creditor to resort to any
other community property. To fail to do so would put creditor below unsecured, so if
they do this they just fall into the “unsecured creditor” list as opposed to the “secured
creditor” list.
b. If lenders on an equitable basis can “tap” at her door and find solice in their euitable
claims, then she can go back to court to get reimbursed by he husband for what she is
owed.
F. Creditors’ Rights.
1. SECTION 910 – The community is liable for a debt incurred by either spouse before or during
marriage, regardless of which spouse hast he management and control of the property and
regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.
a. “During marriage” does not include period of time when the spouses are living separate
and apart prior to judgment of dissolution or legal separation.
2. SECTION 911 – The earnings of a married person are not liable for a debt incurred by the
person’s spouse before marriage. A married person’s pay will remain not liable if they are
held in a deposit account into which the spouse has no right of withdrawal and where there is
no commingling with other property in the community estate.
3. SECTION 913 – The separate property of a married person is liable for a debt incurred by the
person before or during marriage. However, the separate property is not liable for debt
incurred by the person’s spouse before or during marriage.
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4. SECTION 914 – (a) A married person is liable for the following debts incurred by the spouse
during marriage:
a. (1) Debt incurred for necessaries of life while the spouses are living together.
b. (2) Debt incurred for common necessaries of life of the person’s spouse while the
spouses are living separately.
c. (b) The separate property of a married person may be applied to the satisfaction of a
debt for which the person is personally liable. If separate property so applied at a time
when nonexempt property in the comm. estate or separate property of the person’s
spouse is available but is not applied to the satisfaction of the debt, the married person
is entitled to reimbursement to the extent such property was available.
5. SECTION 915 – Child or spousal support pre-existing the marriage is a debt incurred before
marriage, even if the court order for support is made during the marriage. Community
property can be applied toward the debt but the community is entitled to reimbursement from
separate funds.
6. SECTION 916 -7. Grolemund v. Cafferata (Cal. 1941): H was in a car accident and was sued by the victim.
The victim won a judgment. Held – comm. funds are liable for the judgment. This is because
H had management and control of the comm. prop.
8. Marriage of Feldner (Cal. Ct. App. 1995). H entered into a K during marriage, then breached
it after separation. Court held that the debt was a community one because the K was entered
into during marriage.
a. Although W could have requested reimbursement for the separate conduct of H but did
not. It is not up to the courts to do this for her.
b. Community debt because it was created when K was ‘signed’ and this occurred during
marriage.
c.
9. American Olean Tile Co., Inc. v. Schultze (Cal. Ct. App. 1985). The community business
was awarded to H in a martial settlement agreement. H failed to pay a promissory note.
a. Held – the company that held the note could not go after W’s property. The note was
the separate obligation of H.
b. The debtor could have avoided this outcome by getting both spouses’ signatures on the
note.
10. In re Marriage of Braendle (Cal. Ct. App. 1996). Upon separation H was given stock valued
at more than the assets given to W. H was ordered to pay W an equalization. The stock was
turned over to W’s atty., who turned it over to the court. H’s creditor also claimed the stock
and received a judgment lien.
a. Held – W gets the stock because when the stock was turned over to the court, W’s
interest in the stock was perfected and there was notice to the world that she had an
interest in the stock. Her personal property is not subject to the debts incurred by her
former spouse.
b. Equalizer payment – pretty easy math. Take the difference between the T sheet (that
separates comm.. prop. Between H and W, and split the difference) and divide it by 2
and have the one w/ “more” “cut a check” to the other one.
11. Mejia v. Reed, 31 Cal. 4th 657
a. ROCEDURAL POSTURE: Defendant putative father sought review of a judgment
from the Court of Appeal, Sixth Appellate District (California), which, in a paternity
proceeding brought by plaintiff mother, reversed the trial court's summary judgment in
favor of the putative father regarding the mother's challenge to a transfer of property.
b.
c. OVERVIEW: The putative father had an extramarital relationship with the mother. In a
subsequent divorce proceeding, the putative father, pursuant to a marital settlement
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agreement (MSA), transferred all his interest in jointly held real property to his wife.
The mother, claiming that the purpose of the transfer was to prevent her from collecting
child support, asked the court to impose a lien on the real property. In reversing the trial
court's grant of summary judgment to the putative father, the appellate court held that a
transfer of real property under an MSA could be found invalid under the Uniform
Fraudulent Transfer Act (UFTA), Cal. Civ. Code �3439 et seq. The court held that the
UFTA applied to property transfers under marital settlement agreements. The court
determined, however, that there was no triable issue of fact as to constructive fraud. The
discounted value of future child support, because it was generally paid from future
income rather than current assets, was not to be considered as a debt in determining
solvency under Cal. Civ. Code �3439.05. Thus, the putative father was not rendered
insolvent by the transfer. Actual fraud, however, was a triable issue.
d. OUTCOME: The court reversed and remanded.
e. A mother who had a pending paternity suit against a doctor, the father of her child, filed
a lis pendens against real property which had been awarded to the doctor’s wife under a
marital settlement agreement (MSA). The trial court in the paternity action awarded
child support to the mother but ruled that she had no standing to challenge the transfer
of property under the MSA. The mother then filed an action to establish a lien on the
real property, asserting that the MFA was a fraudulent transfer. The trial court assumed
that the Uniform Fraudulent Transfer Act (UFTA), Civ. Code, ��3439–3439.12,
applied to the MSA, but granted the doctor's summary judgment motion on the grounds
that no evidence was presented of actual intent to defraud, and the transfer did not
render him insolvent. (Superior Court of Santa Clara County, No. CV 769375, Frank
Cliff, Judge, and Robert A. Baines, Judge.) The Court of Appeal, Sixth District, No.
H020771, reversed, holding that although the UFTA applied to MSA's, triable issues of
fact precluded summary judgment.
f. The Supreme Court reversed and remanded for further proceedings. The court
concluded, based on the policy considerations underlying the UFTA and the Family
Code provisions governing dissolution judgments and settlements, that the UFTA
applied to the property transfers made under the MSA entered into by the doctor and his
former wife. It also held that there was no triable issue of fact as to constructive fraud,
because the doctor was not insolvent at the time of the transfer, or rendered insolvent by
it. The doctor’s sole postdissolution asset was his medical practice. Income he had not
yet earned was not an asset under the UFTA. Because it is generally paid from future
income rather than current assets, future child support obligations should not have been
considered in determining the doctor's solvency under Civ. Code, �3439.05. Although
there was no triable issue of fact as to constructive fraud, actual fraud remained a triable
issue for decision. (Opinion by Kennard, J., expressing the unanimous view of the
court.) [*658]
VI. Division of Community Property at Dissolution.
A. Property settlement agreement.
1. In re Marriage of Hufford (Cal. Ct. App. 1984). Spousal support agreements are always
modifiable unless there is a specific agreement that disallows it.
a. Here, although there was a provision saying the parties could not modify the agreement
without the consent of the other spouse, there was nothing that said that the court could
not modify the agreement. Therefore, court modification was allowed. (Section 4320)
B. Division by court order.
1. SECTION 2501 – “Community estate” includes both comm. and quasi-comm. assets.
a. Robinson v. Robinson – the court has no right to divide sep. prop.
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2. SECTION 2552 – Valuation of the assets should take place as near as practicable to the time
of trial.
3. SECTION 2553 – court may make any order necessary to carry out the purposes of division.
4. SECTION 2556 – If an asset was omitted, the court was the discretion to divide the asset
unequally upon good cause.
5. SECTION 2601 – the court can award an asset solely to one party if it is proper to effect a
substantially equal division of the comm. estate.
6. SECTION 2621 – debts incurred before the marriage will be confirmed without offset to the
spouse who incurred the debt.
7. SECTION 2623 – Debts incurred after the marriage for the necessities of life will be
confirmed to either spouse according to the parties’ respective needs and abilities to pay at the
time the debt was incurred.
a. For non-necessities, the debt is confirmed to the spouse who incurred the debt.
8. SECTION 2625 – separate debts, including debts incurred by a spouse during the marriage
and before the date of separation, that were not incurred for the benefit of the comm. shall be
confirmed to the spouse who incurred the debt.
9. SECTION 2626 – the court can order reimbursement for debts paid after separation but before
trial.
a. Epstein credits – if a party pays the mortgage on comm. prop., they get credit on their
side of the balance sheet.
b. Watts charge – if one of the parties is staying on the prop., the court can charge the fair
rental value of the prop. to the occupying spouse’s side of the balance sheet.
10. SECTION 2650 – for property held as joint tenants or tenants in common, the court can divide
the sep. prop. interests of the parties.
11. SECTION 3802, 03 AND 04 – Duke order. If the court determines that sale of the house and
moving would have an adverse effect on a child, it can order a deferred sale of the home.
a. In re Marriage of Stallworth. W and son were allowed to stay in the family home until
son reached 18 yrs. old. Although the trial court, after weighing factors, can issue a
deferred sale of the house, the trial judge did not weigh factors here because there was
no evidence was presented. Therefore it was an abuse of discretion.
12. When getting a dissolution, the court has the ability to bifurcate the trial to determine marital
status first and other issues later. Gionis v. Superior Court.
a. The courts are more inclined to grant this than not to.
13. There must be personal jurisdiction in order for the court to be able to do a dissolution in the
state. Muckle v. Superior Court.
a. In determining personal jurisdiction and whether there are minimum contacts, there
must be minimum contacts at the time of the proceeding, not in the past.
b. Although H had lived in CA for 10 years, he was domiciled in GA at the time W filed
dissolution papers in CA.
14. There is sufficient notice to comport with Due Process requirements when W checked a box
on a disso. form and listed the assets, even though the specific value of each asset was not
listed. In re Marriage of Andresen.
a. The court determined the value of the property and set an equalizer payment. H did not
show up so there was a default judgment. If H wanted to contest the values, he should
have shown up.
15. If one spouse is awarded more of the assets, an equalization payment will be required.
a. In re Marriage of Tammen – court held that the equalization could not be in the form
of a note because a note is inferior to actually having the money.
1). The note was bad because there was a long period of deferral (10 years) with no
interest payments in the meantime.
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16. If there is a negative estate (either no assets but the existence of liabilities or liabilities that
outweigh the assets), the court may divide the obligations equitably, taking into consideration
the parties’ respective earning power.
17. In re Marriage of Micalizio – valuation problem with stock of a closely held corp. When
looking to the value, the court failed to take into consideration all aspects of the stock,
including the fact that its value was lessened because H only owned a minority block of the
shares.
18. In re Marriage of Harrington – After division of the property, each party is responsible for
their own share of the taxes.
a. H used his ½ of the proceeds from the sale of the family residence in a more tax
favorable manner than his W did. W wanted H to pay ½ of the taxes that remained on
her portion of the proceeds. Court said no, W is liable for her own taxes.
C. Post Dissolution Remedies.
1. SECTION 2121 – there shall be no set aside of judgment unless the court finds the facts
alleged as the grounds for relief materially affected the original outcome and that the moving
party would materially benefit from the granting of the relief.
2. SECTION 2122 – Grounds and time limits for setting aside judgments:
a. Grounds:
1). Actual fraud/perjury/failure to comply with disclosure requirements where the
defrauded party was kept in ignorance or in some other manner was fraudulently
prevented from fully participating in the proceeding. Time limit – one year after
the date on which the party either discovered or should have discovered the fraud.
a). Extrinsic fraud – prevents you from fully participating at all.
b). Intrinsic fraud – you are there to participate but the other side just cheats.
2). Mental incapacity – two years after the date of entry of judgment.
3). Mistake (either mutual or unilateral) must be brought within one year after the
date of entry of judgment.
Class notes:
Ccp 473  family code 2122 (see also fam. Code 2120)
Ccp 632
Ccp 008
Ccp 1003/1005
2107, 2101 “Final declaration of disclosure”
Throw in “equity tow truck” on exam
3. Marriage of Varner – H lied about the value of his businesses (said they were worth $0 even
though they were worth millions). There were signed stipulations from the parties dividing the
property.
a. Held – The stipulation will be set aside if it is found that one spouse failed to disclose
information to the other or else disclosed false information.
b. Between the date of separation and the date of distribution, former spouses occupy
confidential relations with each other such that they owe each other fiduciary
obligations.
c. The grounds for setting aside this judgment was mistake – W did not know the true
value of the properties.
4. In re Marriage of Kieturakis, 138 Cal. App. 4th 56
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a. What if you bring it w/in the time of 473, does presumption kick in or no? because
that is not met… they leave this question OPEN.
5. Marriage of Rossi – W concealed lottery winnings. She claimed that she was in a lottery pool
at work but that she had withdrawn from it and that a portion of the winnings were gifted to
her. She consulted with the lottery board as to how she might conceal the winnings from her
H. She filed for disso. soon after winning but listed the disso. date as 6/27/94. In the
meantime, H is filing for bankruptcy. He later learns of the winnings.
a. Held – H got all $1.3M of the lottery winnings. FAMILY CODE SECTION 1101(h) –
if there is a breach of fiduciary duty, the court may award 100% to the other spouse of
any asset undisclosed or transferred in breach of the fiduciary duty.
6. Henn v. Henn – H had a pension, which W knew about, but was omitted from the marriage
settlement. H later filed to reduce spousal support and W countered by requesting an order to
show cause why the pension was not divided. This motion was denied without opinion.
a. Held – Because the pension was not listed in the pleadings for decree of divorce as
comm. prop., it is unadjudicated and is subject to future litigation.
b. SECTION 2556 – A party may file a postjudgment motion or order to show cause in
the proceeding in order to obtain adjudication of any community estate asset or liability
omitted or not adjudicated by the judgment.
1). There is no case law that states that an unadjudicated comm. prop. asset can be
adjudicated in a motion to modify the prior decree.
7. Aloy v. Mash – Δ was Π’s atty. during disso. Δ did not assert W’s right to H’s pension at the
time of disso.
a. Held – There is a triable issues because Δ has an obligation to undertake reasonable
research. Atty. here relied on a single case in an unresolved area of the law.
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