Opinion
A094731, A096862, A097023
Filed December 11, 2002 Certified for Partial Publication
Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part I.
Appeal from the Superior Court Alameda County, No. 810603-6, Honorable Stephen Dombrink, Judge.
Robert L. Walker, for Appellant Scott R Nicholson.
Garrett C. Dailey, Attorney Appellant Elizabeth Sparks.
This is an appeal, and cross-appeal from a final judgment dividing the community property, and ordering Scott R. Nicholson to make an equalizing payment to his former wife, Elizabeth Sparks. In his appeal, Nicholson contends that that there is no substantial evidence to support the court's finding that the value of the residence it awarded to him, 120 Fairlawn, in the City of Berkeley, (hereafter Fairlawn), and the one awarded to Sparks, 416 Gravatt Drive (hereafter Gravatt), in the City of Oakland, were equal. In her cross-appeal, Sparks contends that the court erred in finding that Nicholson should be credited, pursuant to Family Code section 2640, subdivision (b), in the amount of $30,000 for separate property he used to pay down their community credit card debt which permitted them to qualify for a loan to purchase the Gravatt residence. We shall hold that the valuation of Gravatt and Fairlawn is supported by substantial evidence, but that section 2640, subdivision (b) does not provide for reimbursement of the separate property Nicholson used to pay community credit card debt. We therefore shall remand to the trial court for recalculation of the equalizing payment it ordered Nicholson to pay.
Nicholson originally filed a notice of appeal (A094731) and Sparks filed a cross-appeal from a partial judgment on bifurcated issues, entered on February 27, 2001. The appeal in A096862, and cross-appeal A097023 are from a "Second Partial Judgment on Reserved Issues" filed on September 13, 2001. None of these were final judgments, because although each partial judgment resolved some of the issues relating to the division of property, other issues concerning the same subject matter were still pending. (See, e.g,. Fam. Code, §§ 2025, 4800,; Cal. Rules of Court, rule 1269.5; In re Marriage of Ellis (2002) 101 Cal.App.4th 400, 403-404; In re Marriage of Griffin (1993) 15 Cal.App.4th 685, 689; In re Marriage of Van Sickle (1977) 68 Cal.App.3d 728, 736-737.)
Both parties urged the court to accept jurisdiction, arguing that the practice of the Alameda County Court to divide the hearing on property division into parts, and render a series of "partial judgments" should result in entry of a series of separate appealable judgments. The scope of this court's jurisdiction is defined by statute, ( In re Marriage of Griffin, supra, 15 Cal.App.4th 685, 687) and cannot be expanded by the local calendaring practices of a particular county, or the agreement of the parties that they desire immediate review. Other established avenues exist for obtaining review of such interlocutory orders including the procedures set forth in Family Code section 2025, and Rules of Court, rule 1269.5, or, if an appeal from a final judgment would be an inadequate remedy, the parties may petition for review by writ.
The jurisdictional problem, however, was resolved when the trial court entered judgment resolving the last remaining issue relating to property division pending between the parties. The parties have stipulated that all their pending appeals be consolidated and be deemed fully briefed, and that no additional issues be raised with respect to the judgment resolving the last remaining issue of division of personal property. We therefore deem the premature notice of appeal from the partial judgment to be an appeal from the final judgment.
All subsequent statutory references are to the Family Code unless otherwise indicated.
I. Property Valuation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. Relevant Facts
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Substantial Evidence Supports the Conclusion that the Two Properties Were Equal in Value
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
II. Reimbursement for Separate Property Used to Pay Down Community Credit Account
The court also ordered that Nicholson "shall be entitled to a $30,000 credit pursuant to Family Code § 2640(b) for his traceable separate property contributions to the acquisition of the Gravatt Drive real property." In its statement of decision the court found that, during the marriage, Nicholson's mother periodically transferred money to him. Nicholson claimed these funds were loans which had to be repaid by the community, whereas Sparks asserted they were gifts. With respect to most of the transfers of funds, the court found that Nicholson failed to offer any credible evidence of the amounts transferred, or any documentation supporting his contention that they were loans. However, "[i]t was not disputed that [Nicholson's] mother transferred approximately $30,000 to [Nicholson] which was used to pay down . . . the credit card obligations to permit them to qualify for a loan to purchase the Gravatt residence. [Nicholson] claimed that this was a loan that had to be repaid. There was no writing associated with this `loan.' Although it cannot be treated as an enforceable loan, the Court finds that it is equitable for Scott to be credited this amount as a Family Code § 2640(b) contribution to the purchase of the Gravatt Drive residence, and he shall receive a credit in that amount in the property division."8
Sparks, in her cross-appeal, contends that the court erred in determining that Nicholson be reimbursed pursuant section 2640, subdivision (b) for the use of his separate property to pay community credit card debts, because the payment of credit card debts is not, under any reasonable construction, a "contribution to the acquisition of property" or payment for improvements within the meaning of this section.9 Nicholson, on the other hand, contends, his payment of their debt does qualify as a contribution to the acquisition of Gravatt because, without the pay down of credit card debt, the parties could not have obtained a loan, and therefore could not have acquired the Gravatt property. We shall conclude the payment of community credit card debt is not a contribution to the acquisition of property within the meaning of section 2640, and remand to the trial court to recalculate the amount of the equalizing payment it ordered Nicholson to pay without this credit.
Subdivision (a) of section 2640 provides that "[c]ontributions to the acquisition of the property" "include downpayments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of the property, but do not include payments of interest on the loan, or payments made for maintenance, insurance, or taxation of the property." (Italics added.)
This section represents a specific legislative rejection of the general presumption that separate property used for community purposes is a gift, as it was applied in In re Marriage of Lucas (1980) 27 Cal.3d 808, 816. In Lucas, supra, the wife's separate trust fund was used to make a down payment, and to pay for improvements to a house the couple purchased together, and took title, to as joint tenants. The "court held that a separate property contribution during marriage to the purchase or improvement of a family home was [presumptively] a gift and, absent an agreement [to the contrary], there was no right to reimbursement at the time of divorce. ( In re Marriage of Fabian (1986) 41 Cal.3d 440, 446-447 [ 224 Cal.Rptr. 333, 715 P.2d 253]; Lucas, supra, at p. 816; See v. See, supra, 64 Cal.2d at p. 785; In re Marriage of Walrath, supra, 17 Cal.4th at pp. 914-915, 918; In re Marriage of Koester (1999) 73 Cal.App.4th 1032, 1034 [ 87 Cal.Rptr.2d 76].)" ( In re Marriage of Cochran (2001) 87 Cal.App.4th 1050, 1061.) The legislative history, "of former Civil Code section 4800.2 [now section 2640] reveals a legislative judgment that it would be fairer to the contributing party to allow separate property reimbursement upon dissolution." ( In re Marriage of Cochran, supra, 87 Cal.App.4th 1050, 1061-1062 [internal quotation marks omitted], citing In re Marriage of Walrath, supra, 17 Cal.4th at p. 918.)
However, "the no-reimbursement rule of See v. See [(1966) 64 Cal.2d 778, 785] has been voided only insofar as the separate property contributions are within the category of `contributions to the acquisition of property' as defined in Family Code section 2640" (Kirkland, Cal Fam. Law, § 23.12, at pp. 23-32.1, italics added.)10 Thus, absent an agreement, the use of separate property to pay community debts, is not reimbursable, except where the payment is made post separation. (§ 2626) In this case, the parties had not separated when Nicholson paid their credit card debt with the funds received from his mother. Therefore, absent an agreement that he would be reimbursed, which he did not even attempt to prove, his payment of community credit card debt, would not normally be reimbursable. The question, then, is whether the additional fact that the payment of these debts allowed the parties to qualify for a loan to purchase Gravatt qualifies this otherwise non-reimbursable payment as a "contribution to the acquisition of property" within the meaning of section 2640
Nicholson argues, in reliance upon the decision in In re Marriage of Cochran, supra, 87 Cal.App.4th 1050, that if section 2640 does not expressly exclude payment of credit card debts from the category of reimbursable "contributions to the acquisition of property," and payment of the credit card debt was necessary in order to qualify for the loan, which in turn facilitated the purchase of Gravatt, then the payment contributed to the acquisition of Gravatt, and should be reimbursable. The decision in Cochran, supra, is much narrower, however, than Nicholson suggests. In Cochran, supra, the husband sought reimbursement for, among other things, school fees that were a condition of obtaining a building permit to build a family residence. The court found that school fees were not a tax, and therefore were not specifically excluded from reimbursement. It further concluded that, because the payment of the fees was required by the local planning agency as condition of the building permit, the payment was one of the costs of making the improvement, and therefore reimbursable, as a "`payment for improvements,'" one of the specifically included items in the category of contributions to acquisition of property. ( Id. at pp. 1061-1062.)
The obligation to pay the school fees, in Cochran, supra, was includable in the cost of improving the property because the payment was an express condition of the building permit, and the couple would not have had any obligation to pay the fees if they had not constructed a home. By contrast, here, the obligation to pay the consumer credit card debts preexisted the acquisition of Gravatt, and they were obligated to pay these debts whether or not they acquired Gravatt. It was necessary to pay the credit card debts down, prior to purchasing Gravatt only because the parties had accumulated too much debt in relation to their income to qualify to take on more debt. Although the payment of the credit card debts facilitated qualification for a loan, the payments did not "contribute to acquisition of the property." Rather, the payment simply reduced preexisting consumer debt unrelated to acquisition of the property.
Although the forms of reimbursable contributions listed in subdivision (a) of section 2640 are not exclusive, it does not follow, that any type of expenditure which simply facilitates property acquisition, is reimbursable under subdivision (b) of section 2640 A comparison of the list of items included in, and excluded from, the category of "[c]ontributions to the acquisition of the property" provides us interpretative guidance by defining the parameters of reimbursable separate property contributions. The common thread linking the included items, i.e., downpayments, payments for improvements, and payments to reduce the principal of a loan used to purchase the property or make improvements to it, is that each of these types of payments either directly contribute to equity acquisition, or are expenses or costs of making improvements which may increase equity, assuming that the improvement actually results in an increase in property value. By contrast, payments of "interest on the loan, or payments made for maintenance, insurance, or taxation," which are specifically excluded, do not contribute to equity acquisition, despite the fact that they are expenses necessary to retain ownership, or preserve, and protect the owner's interest. Thus, not all expenses associated with acquisition or ownership of property are reimbursable, and the types of separate property payments that are reimbursable under this section are those which contribute to the acquisition of equity in the property either directly, or indirectly by paying the cost of improvements.
Applying these parameters to the payments for which Nicholson seeks reimbursement we conclude that Nicholson's use of separate property to pay down community credit card debts does not qualify as a "[c]ontribution to the acquisition of" Gravatt. His separate property funds were not used to acquire or increase the equity in Gravatt. Instead, the funds were used to pay consumer credit card debts before the parties acquired Gravatt. The debts paid bore no relationship at all to the Gravatt property, and the obligation to pay them existed regardless of whether they acquired the Gravatt property. Paying down the debts before purchasing Gravatt reduced their consumer debt to income ratio, and allowed the parties to qualify for a loan, but made no contribution to the amount of equity they acquired. Nicholson did not even attempt to establish that the credit card debts he paid were for expenses relating to any improvement of the Gravatt property.11 In short, his separate property funds were not used to acquire Gravatt, but rather to pay off community debts that preexisted the acquisition of Gravatt.
We conclude that the payment of community debts prior to the acquisition of property, and unrelated to any improvement of the property does not, under any reasonable construction, convert the pre-separation payment of community debts into a reimbursable contribution of separate property to the acquisition or improvement of community property pursuant to section 2640 If the Legislature intended such a result it would have had to enact a much broader statute providing for reimbursement of separate property used to pay community debts. It did not do so. Instead, in enacting section 2640 it limited reimbursement to the use of separate property for "acquisition" or "improvement" of community property.
Our conclusion that Nicholson was not entitled to a credit pursuant to section 2640 for the $30,000 of his separate property used to pay down the community debts prior the purchase of Gravatt, will require recalculation of the equalizing payment the court ordered Nicholson to pay in its second partial judgment on reserved issues, filed on September 13, 2001, and we shall remand the matter for that purpose.
CONCLUSION
The order crediting Nicholson with $30,000 pursuant to Family Code section 2640 is vacated, and the matter is remanded for the purpose of recalculating the equalizing payment, without this credit. In all other respects, the judgment is affirmed. Costs are awarded to Sparks.
We concur:
MARCHIANO, P.J.
MARGULIES, J.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .