Marriage of Elliott CA2/6 ( 2021 )


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  • Filed 9/13/21 Marriage of Elliott CA2/6
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
    California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
    not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
    has not been certified for publication or ordered published for purposes of rule 8.1115.
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION SIX
    In re Marriage of LYNDA and                                  2d Civil No. B304323
    MICHAEL ELLIOTT.                                         (Super. Ct. No. 17FL02195)
    (Santa Barbara County)
    LYNDA ELLIOTT,
    ORDER MODIFYING
    Respondent,                                         OPINION AND DENYING
    REHEARING
    v.                                                          [NO CHANGE IN
    JUDGMENT]
    MICHAEL ELLIOTT,
    Appellant.
    THE COURT:
    It is ordered that the opinion filed herein on August
    24, 2021, be modified as follows:
    On the caption page, appellant’s name to be corrected
    from “MICAHEL” to “MICHAEL.”
    There is no change in the judgment.
    Respondent’s petition for rehearing is denied.
    GILBERT, P.J.                          YEGAN, J.                              PERREN, J.
    Filed 8/24/21 Marriage of Elliott CA2/6 (unmodified opinion)
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
    California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
    not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
    has not been certified for publication or ordered published for purposes of rule 8.1115.
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION SIX
    In re Marriage of LYNDA and                                  2d Civil No. B304323
    MICHAEL ELLIOTT.                                         (Super. Ct. No. 17FL02195)
    (Santa Barbara County)
    LYNDA ELLIOTT,
    Respondent,
    v.
    MICAHEL ELLIOTT,
    Appellant.
    Michael Elliott (Husband) and Lynda Elliott (Wife)
    were married in August 2003 and separated in August 2017. In
    its December 21, 2018 status only Judgment for Dissolution, the
    trial court ordered that one half of the parties’ Vanguard IRA
    transferred to a rollover account in Wife’s name. On December
    19, 2019, the trial court entered a judgment on reserved issues
    that, among other things, divided the parties’ real estate.
    Husband alleges the trial court erred when it denied his claims
    for reimbursement of his separate property in the Vanguard IRA
    and his separate property contributions to the parties’ real estate.
    (Family Code, §2640.)1 The trial court concluded Husband failed
    adequately to trace his separate property contributions to these
    assets and denied all of his reimbursement claims. Husband
    contends the trial court erred because his tracing was adequate.
    We agree and reverse.
    FACTS
    The parties met in 1995 and began living together in
    April 1996 when they moved into a house on West Street in
    Laguna Beach (West Street). Husband purchased the West
    Street house by making the down payment of $51,500. He held
    title to the property in his name, as a single man. Wife testified
    that she made the down payment, that the parties had a joint
    bank account, and that they agreed they would share equally any
    assets acquired during their relationship. The trial court rejected
    this testimony, crediting Husband’s testimony on the issue
    instead.
    In connection with a prior divorce, his 1997 divorce
    from his first wife, Husband received title to a house on Cebolla
    Street in Rancho Santa Margarita (Cebolla). The house was
    rented out until it was sold in 2011. In 2007, the parties
    refinanced this property, taking out cash to pay off the mortgage
    on another property. The trial court found the Cebolla house
    became community property in this transaction. Husband does
    not dispute the characterization.
    1All further statutory references are to the Family Code,
    unless otherwise noted.
    2
    Husband next bought a house on National Park Drive
    in Laguna Niguel (National Park) in February 2003. He made
    the down payment of $295,000 and took title to the property in
    his name, as “an unmarried man.” The parties moved into the
    National Park house in February and were married six months
    later, in August 2003.
    In October 2004, after they were married, the parties
    sold the West Street house. They used some of the proceeds in
    May 2005 to acquire a condominium (the Kazan Street property)
    in an exchange under section 1031 (section 1031) of the Internal
    Revenue Code. (26 U.S.C. § 1031.)2 Husband took title to the
    Kazan Street property as a married man, as his sole and separate
    property. In July, the parties used more of the proceeds from the
    West Street sale to purchase an office condominium in Mission
    Viejo (Chrisanta). Husband and Wife took title to the Chrisanta
    property as joint tenants. In 2007, Husband and Wife used
    jointly borrowed funds from a refinancing of Cebolla to pay off the
    loan secured by the Chrisanta property.
    In 2008, the parties created the Elliott Family 2008
    Trust and transferred title to the Cebolla, Chrisanta, Kazan and
    National Park Drive properties to the trust. At that time,
    Cebolla and Chrisanta were already community property. The
    trial court found the transfer to the trust also transmuted Kazan
    and National Park Drive from Husband’s separate property to
    2  A section 1031 exchange allows “a taxpayer [to] defer
    taxes on gains from the sale of a property by using those gains to
    purchase a second property.” (CADC/RADC Venture 2011-1 LLC
    v. Bradley (2015) 
    235 Cal.App.4th 775
    , 780.) These transactions
    typically occur through an intermediary that temporarily holds
    title to one or both of the properties and to the proceeds from the
    sale. (Ibid.)
    3
    community property. Husband does not dispute these
    characterizations.
    In 2011, after the properties had been transferred to
    the trust, the parties sold both Kazan and Cebolla. Proceeds
    from the sales were deposited with an asset exchange company to
    facilitate section 1031 exchanges. The proceeds were later
    transferred to acquire a house on Windsor Way in Santa Barbara.
    In 2013, the parties sold the National Park Drive house and
    bought another house on Mission Ridge Road in Santa Barbara.
    As a consequence of these transactions, the parties
    owned three pieces of real estate when they separated in 2017:
    Mission Ridge Road, Windsor Way and Chrisanta. Forensic
    accountant William Duerkson attempted to trace Husband’s
    separate property to each of these assets. Because the parties
    had shredded older bank statements and other financial records
    before their move to Santa Barbara, Duerkson relied on grant
    deeds, deeds of trust, escrow closing statements, tax returns and
    his discussions with Husband to trace Husband’s separate
    property from one property to another. Duerkson did not
    determine the source of the down payments Husband made on
    Cebolla, West Street and National Park Drive because those
    properties were purchased before the marriage and were titled as
    Husband’s separate property. Instead, he treated each down
    payment as Husband’s separate property and then attempted to
    trace that investment from the property originally purchased to a
    subsequently purchased property.
    Tracing Evidence
    Mission Ridge Road. Duerkson initially concluded
    that Husband’s pro-rata separate property interest in the Mission
    Ridge Road house was 68% of its equity, or $504,025. He reached
    4
    this conclusion based on his understanding that funds for the
    down payment on the Mission Ridge Road house came from the
    sale of the National Park Drive house. Husband bought the
    National Park Drive house six months before the marriage,
    making the down payment of $295,000 and taking title in his
    name, as a single man. Duerkson did not determine the source of
    funds for that down payment. Community property was used to
    make the mortgage payments on the National Park Drive house.
    The parties sold the National Park Drive house in
    October 2013, and deposited $641,625 in sales proceeds into a
    credit union account. Duerkson allocated 60% of the sales
    proceeds to Husband’s separate property and 40% to community
    property. The parties’ down payment on the Mission Ridge Road
    house was made in two installments, both withdrawn from the
    credit union account. Duerkson allocated the down payments
    first to Husband’s separate property, and when that was
    exhausted, to community property. At the end of that process,
    Husband’s separate property amounted to 68% of the equity in
    the Mission Ridge Road house, or $504,025. He acknowledged
    that, if community property was exhausted first, Husband’s
    separate property interest in the house would be $291,296.
    Chrisanta. The parties acquired the Chrisanta office
    condominium after they were married, in a section 1031
    exchange. The down payment of $155,000 came from the sale of
    the West Street house. Duerkson allocated 85% of those funds to
    Husband’s separate property. In 2007, Husband and Wife
    refinanced the Cebolla property, taking out $409,000 in cash.
    They used $281,014 to pay off the mortgage on Chrisanta.
    Duerkson allocated 72.5% of those proceeds to Husband’s
    separate property and 27.5% to community property.
    5
    Windsor Way. The parties acquired Windsor Way in
    September 2011 by making a down payment of $272,000. Title to
    this property is in the names of both parties, as community
    property. Duerkson testified funds for the down payment came
    from a section 1031 exchange for Kazan Street and the remaining
    sales proceeds from Cebolla. Both sources were, in Duerkson’s
    opinion, 100% Husband’s separate property. Because community
    funds were used to pay closing costs and other acquisition costs,
    Duerkson concluded 7% of the down payment was attributable to
    community property. He assigned the remaining 93% to
    Husband’s separate property. Duerkson concluded Husband’s
    section 2640 reimbursement claim for Windsor Way was
    $251,261.
    Wife disputed Duerkson’s characterization of the
    various down payments and his allocation of the separate
    property and community property interests in each asset. She
    testified that both spouses contributed to the down payment on
    West Street and that their joint account paid some of the
    expenses associated with the Cebolla house.3 In addition, in his
    answers to interrogatories, Husband described the West Street,
    National Park Drive, Chrisanta, and Kazan properties as having
    been “purchased by Lynda and Mike.” Wife also noted that there
    were no bank statements tracing the source of the down
    payments on West Street, National Park or Chrisanta. In
    addition, funds from the sale of West Street and Kazan were
    deposited with an intermediary to facilitate section 1031
    exchanges. Duerkson had no documentation from the
    intermediary indicating whether additional funds from
    community property sources were held in the intermediary’s
    3   The trial court found this testimony not credible.
    6
    account or tracing specific funds from that account to specific
    assets.
    Vanguard IRA. Before the marriage, Husband
    maintained an individual retirement account (IRA) at the
    investment firm Fidelity. Husband’s forensic accountant,
    Duerkson, calculated that, in 2002, the Fidelity IRA had a fair
    market value of $52,087. Husband contributed an additional
    $34,606 to the account in 2002, creating a balance of $86,693. In
    2003 and 2004, after the marriage, the parties contributed about
    $67,000 to the IRA. Husband transferred the IRA from Fidelity
    to the investment firm Vanguard in 2005. At that time, it had a
    value of $137,815. Another $4,500 was deposited to the account
    in 2008. There were no more contributions to the account. By
    the time the parties separated, the Vanguard IRA had earnings
    of about $359,000 and a total value of $502,000.
    Duerkson allocated all of the contributions made
    before marriage to Husband’s separate property and all of the
    contributions made after marriage to community property. He
    concluded that 56% of the IRA was Husband’s separate property
    while 44% belonged to the community.
    The trial court’s December 2018 status only judgment
    of dissolution reserved jurisdiction over the division of property,
    and ordered the Vanguard IRA to be divided equally with Wife’s
    portion transferred to a rollover IRA in her name. The judgment
    further notes this order was “issued to preserve the ability of
    [Husband] to defer distribution of his or her community interest
    on the death of the IRA owners.” The trial court received no
    expert testimony or other evidence relating to the IRA before it
    entered the status only judgment. Duerkson testified at trial
    7
    that Husband was entitled to an additional $138,744 from Wife’s
    rollover IRA, to reimburse his separate property.
    The Statement of Decision and Judgment on
    Reserved Issues. The trial court issued a lengthy statement of
    decision which included its findings that the parties had no
    agreement to share property acquired before marriage and no
    joint bank account prior to marriage. The statement of decision
    also reflects the trial court’s findings that Husband used his
    separate property to acquire various assets, and that he had a
    section 2640 claim for reimbursement of his separate property
    with regard to some of those assets.
    The trial court’s judgment on reserved issues states
    that its “factual and legal analysis is set forth in its Statement of
    Decision. The court denies [Husband’s] Family Code section 2640
    claims against the properties at [Mission Ridge Road, Chrisanta
    and Windsor Way]. The court also denies [Husband’s] separate
    property allocation claim with respect to the Vanguard Rollover
    IRA . . . in [Wife’s] name.” The trial court awarded Chrisanta to
    Husband and Windsor Way to Wife. It ordered the parties to sell
    Mission Ridge Road with the proceeds to be evenly divided
    between the parties. The trial court left unchanged the equal
    division of the Vanguard IRA it had previously ordered.
    DISCUSSION
    Contentions
    Husband contends the trial court erred when it
    denied reimbursement for his separate property contributions to
    the parties’ real estate because those contributions were
    adequately traced to real estate owned by the parties when they
    separated. He contends the trial court erred when it denied
    reimbursement of his separate property contributions to the IRA
    8
    because the account was established prior to the marriage with
    his separate property and funds were not withdrawn from it.
    Wife contends Husband’s reimbursement claims
    relating to their real estate were properly rejected because
    Duerkson’s tracing was incomplete. Among other things, Wife
    notes that Husband admitted in his discovery responses that
    West Street was “purchased by Lynda and Mike [in] 1995 prior to
    marriage,” and that National Park Drive was “purchased before
    marriage by Mike and Lynda 2003.” In addition, Husband
    provided no evidence tracing the source of the funds he used for
    the down payments on West Street and National Park Drive.
    Wife contends that funds borrowed in the 2007 refinancing of
    Cebolla should be treated as community property because both
    spouses were obligated on the loan. Husband’s separate property
    cannot be traced to real estate purchased with those loan
    proceeds because all of the loan proceeds are community
    property. Husband also failed to exclude the possibility that
    other, community property funds were deposited with the section
    1031 intermediary and used to make the down payments and
    principal payments on Kazan, Chrisanta and Windsor Way.
    Wife contends the trial court correctly denied
    reimbursement from the Vanguard IRA because the status only
    judgment was final as to this asset. Alternatively, she contends
    Husband failed adequately to trace his separate property.
    Standard of Review
    Section 2640, subdivision (b) provides that, “unless a
    party has made a written waiver of the right to reimbursement or
    has signed a writing that has the effect of a waiver, the party
    shall be reimbursed for the party’s contributions to the
    acquisition of property of the community property estate to the
    9
    extent the party traces the contributions to a separate property
    source.” Reimbursement “is not limited to the specific property to
    which the separate property was contributed, but extends to ‘any
    other community property that is subsequently acquired from the
    proceeds of the initial property, and to which the separate
    property contribution can be traced.’ [Citation.]” (In re Marriage
    of Cochran (2001) 
    87 Cal.App.4th 1050
    , 1057 (Cochran).)
    Whether the separate property of a spouse has been
    adequately traced to a community asset is a question of fact for
    the trial court. We review the trial court’s factual findings on
    that issue to determine whether those findings are supported by
    substantial evidence. (In re Marriage of Braud (1996) 
    45 Cal.App.4th 797
    , 823.)
    Tracing Separate Property Contributions
    Tracing is an indispensable prerequisite to any
    reimbursement under section 2640. “[A] contributing spouse
    cannot randomly seek reimbursement from any asset through
    which his or her separate property contribution has at some time
    passed.” (In re Marriage of Walrath (1998) 
    17 Cal.4th 907
    , 923
    (Walrath).) The party seeking reimbursement has the burden to
    trace his or her separate property contributions to specific assets.
    (Cochran, supra, 87 Cal.App.4th at p. 1057.) Virtually any
    credible evidence may be used to establish the status of property
    as separate or community. (In re Marriage of Ciprari (2019) 
    32 Cal.App.5th 83
    , 91.) “[T]rial courts are free to consider and credit
    reasonable, well-supported, and nonspeculative expert testimony,
    when determining whether the proponent has successfully traced
    commingled assets to a separate property source.” (Id. at p. 97.)
    In Walrath, our Supreme Court held that a party’s
    “entitlement to a separate property contribution reimbursement
    10
    is [not] limited to the original community property to which the
    contribution was made . . . .” (Walrath, supra, 17 Cal.4th at p.
    913.) Instead, when the original property is refinanced and the
    loan proceeds are used to “purchase or pay down the
    indebtedness on the original and other assets, the contributing
    spouse can trace the contribution to, and be reimbursed from,”
    both the original asset and the newly acquired assets. (Ibid.)
    Here, the trial court’s statement of decision found
    that Husband made separate property contributions to the
    community’s acquisition of the Cebolla, West Street and National
    Park Drive properties. With respect to each of those properties,
    the trial court also found that Husband had a claim under section
    2640 for reimbursement. Although it made factual findings that
    proceeds from the sale or refinancing of these properties were
    used to acquire new properties (Kazan, Chrisanta, Windsor Way
    and Mission Ridge Road), the trial court’s judgment “denie[d]
    [Husband’s] Family Code section 2640 claims” against those same
    properties in their entirety. This was error.
    Husband acquired Cebolla, West Street and National
    Park Drive before the marriage. To the extent he made down
    payments on these properties prior to the marriage, the down
    payments were, by definition, made with his separate property.4
    (§ 770.)
    4  Husband acquired Cebolla during his first marriage and
    was awarded the property in the judgment of dissolution relating
    to that marriage. The record contains no evidence regarding the
    amount or source of any down payment. There is evidence that
    the property had a fair market value of $190,000 and secured
    debt of $195,000 when title was transferred to Husband.
    11
    In each instance, Husband took title to the property
    as a “single” or “unmarried” man. “The owner of the legal title to
    property is presumed to be the owner of the full beneficial title.”
    (Evid. Code, § 662.) This presumption may be rebutted by clear
    and convincing evidence. (Ibid.) Here, the trial court expressly
    rejected Wife’s testimony that the parties agreed “any real
    property purchased [before marriage] would be owned by both
    equally.” The trial court found instead that, “Inadequate
    evidence was provided to support the existence of any agreement
    as to the . . . equality in ownership of real property purchased
    while cohabitating.” In the absence of clear and convincing
    evidence to the contrary, the title presumption controls. Cebolla,
    West Street and National Park Drive were Husband’s separate
    property until each property was transmuted to the community.
    (In re Marriage of Fossum (2011) 
    192 Cal.App.4th 336
    , 345,
    quoting In re Marriage of Brooks & Robinson (2008) 
    169 Cal.App.4th 176
    ,189, abrogated on other grounds by In re
    Marriage of Valli (2014) 
    58 Cal.4th 1396
    , 1405.)
    The fact that these properties were recharacterized
    as community property through valid transmutations does not
    defeat Husband’s reimbursement claim under section 2640; it is a
    prerequisite to that claim. As our Supreme Court explained in
    Walrath, “a reimbursement right under section 2640 only arises
    once the property becomes community property.” (Walrath,
    supra, 17 Cal.4th at p. 920.) After transmutation from separate
    to community property, “section 2640 provides a right to
    reimbursement upon dissolution for the spouse who contributed
    separate property to [its] acquisition . . . .” (In re Marriage of
    Weaver (2005) 
    127 Cal.App.4th 858
    , 865.) “Commingling of
    separate and community property does not alter the status of the
    12
    separate property interest so long as it can be traced to its
    separate property source.” (Cochran, supra, 87 Cal.App.4th at p.
    1057.)
    The question thus becomes whether Husband traced
    his separate property contributions from Cebolla, West Street
    and National Park Drive to Mission Ridge Road, Chrisanta and
    Windsor Way. The trial court rejected all of Husband’s tracing
    evidence, finding that it was “incomplete” in unspecified respects
    and had unidentified “gaps.” We conclude this was error.
    Mission Ridge Road. In 2013, the parties sold their
    home on National Park Drive and used the proceeds to make the
    down payment on the house on Mission Ridge Road. It is
    undisputed that Husband purchased the National Park Drive
    house in 2003, six months before the marriage, taking title as “an
    unmarried man.” The deed of trust and closing statement from
    that transaction document that Husband made a down payment
    of $295,000. By definition, the funds Husband used for the down
    payment were his separate property because they existed before
    the marriage. (§770.)
    The trial court found that the parties sold the
    National Park Drive house in October 2013 and, “it does appear
    that funds from that sale were used to purchase Mission Ridge;
    however, the tracing is incomplete and community funds were
    available, as discussed below.” It later noted, “While it is clear
    that some funds from National Park were utilized for the
    purchase [of the Mission Ridge house], there are gaps in the
    tracing (admitted by expert Duerkson at trial) that cause the
    court to characterize Mission Ridge as community property.”
    Duerkson relied on recorded deeds and the escrow
    closing statement to establish that Husband made a down
    13
    payment of $295,000 to acquire the National Park Drive house.
    Because the down payment was made prior to the marriage,
    those funds are Husband’s separate property. Similar documents
    established that the 2013 sale of that property netted proceeds of
    $641,625. The parties deposited those proceeds into their credit
    union account and later withdrew $476,300 from the same
    account to make the down payment on the Mission Ridge Road
    house. This evidence adequately traced Husband’s separate
    property contribution of $295,000 to the Mission Ridge Road
    house.
    Chrisanta: At trial, Husband sought reimbursement
    for both the down payment made on the Chrisanta condominium
    and the $203,769 used to pay off the mortgage on this property.
    On appeal, Husband has abandoned his claim for reimbursement
    of the down payment and seeks reimbursement only for his
    separate property contribution to the funds used to pay off the
    Chrisanta mortgage. He contends these funds are his separate
    property because they were derived from the 2007 refinancing of
    Cebolla. The trial court denied Husband’s section 2640 claim,
    reasoning “[t]he mortgage on Chrisanta was paid off near the
    time of the sale of Cebolla, so a complete and reliable calculation
    is not available. This incomplete evidence requires this property
    to be characterized as community property.”
    The characterization of Chrisanta as community
    property is necessary to Husband’s reimbursement claim; it does
    not defeat the claim. (Walrath, supra, 17 Cal.4th at p. 920.) In
    addition, no substantial evidence supports the trial court’s
    finding that the Chrisanta mortgage was paid off “near the time
    of the sale of Cebolla . . . .” To the contrary, the parties agree the
    mortgage on Chrisanta was paid off in 2007 and that Cebolla was
    14
    refinanced in 2007 and then sold in 2011. The trial court failed to
    make any findings on the question of whether Husband
    adequately traced his separate property from Cebolla to the
    Chrisanta mortgage payoff.
    Under Walrath, Husband is entitled to be reimbursed
    for separate property contributions he made to Cebolla if he
    adequately traces those contributions to cash received in the
    Cebolla refinancing and then to the repayment of the Chrisanta
    mortgage. (Walrath, supra, 17 Cal.4th at p. 922.) Duerkson
    determined that Husband’s separate property contributions to
    Cebolla accounted for 72.5% of the loan proceeds received in the
    2007 refinancing. His conclusion that funds from the Cebolla
    refinancing were used to repay the Chrisanta mortgage was
    based on a settlement statement from the refinancing. This
    document shows cash received by the parties from the new loan.
    A handwritten note attached to the settlement statement reads,
    “paid off the office First Sec Thrift 281,014.” This note formed
    the basis for Duerkson’s conclusion that funds from the Cebolla
    refinancing were used to pay off the Chrisanta mortgage.
    The trial court made no findings on the question of
    whether this evidence adequately traced Husband’s separate
    property contributions from the Cebolla loan proceeds to payment
    of the Chrisanta mortgage. Consequently, we cannot infer
    findings in favor of respondent. (Code Civ. Proc., § 634; Ruiz v.
    County of San Diego (2020) 
    47 Cal.App.4th 504
    , 521 (Ruiz).)
    Failure to make findings on a disputed issue is reversible error.
    (Parker v. Contractors State License Bd. (1986) 
    187 Cal.App.3d 205
    , 211 (Parker).) We will remand the matter to permit the trial
    court to make findings on the adequacy of Husband’s tracing and
    15
    the amount of any section 2640 reimbursement to which he is
    entitled.
    Windsor Way. The parties acquired the Windsor
    Way house in 2011, through a section 1031 exchange after selling
    the Cebolla house and the Kazan Street condominium. Because
    both Cebolla and Kazan were Husband’s separate property before
    their transmutation, Husband contends he is entitled to
    reimbursement from equity in the Windsor Way property. The
    trial court rejected this claim, finding that the parties purchased
    Windsor Way “[as] an investment intended to benefit both
    parties. Title was taken by the parties as “community property
    with right of survivorship.” [Exhibit 415] The court finds that
    the funds used for the purchase were commingled community and
    separate property funds, and the testimony of expert Duerkson
    did not adequately unravel them. The community had funds at
    the time that could have been used for the purchase, and
    community funds have been used for expenses [associated with
    the property]. The court finds that Windsor Way is community
    property.”
    The characterization of the Windsor Way property as
    community property does not defeat Husband’s claim for
    reimbursement; it is a prerequisite for the claim. (Walrath,
    supra, 17 Cal.4th at p. 920.) Similarly, the fact that separate and
    community property interests have been commingled in an asset
    does not defeat a reimbursement claim, if the separate property
    interest “can be traced to its separate property source.”
    (Cochran, supra, 87 Cal.App.4th at p. 1057.) We understand the
    trial court’s statement that Duerkson “did not adequately
    unravel” the separate and community property interests in
    Windsor Way to be a factual finding that Husband did not
    16
    adequately trace his separate property contributions from
    Cebolla and Kazan to Windsor Way. We conclude that finding is
    not supported by substantial evidence.
    The cash used to make the down payment on
    Windsor Way came from the sale of Kazan and Cebolla, both of
    which were, at one time, Husband’s separate property. Duerkson
    calculated the separate property and community property
    interests in each of these assets. He then relied on escrow closing
    statements, recorded deeds and tax returns to trace Husband’s
    separate property from Kazan and Cebolla through the asset
    exchange company to the Windsor Way property.
    Specifically, the seller’s final settlement statement
    from the September 2011 sale of Kazan shows that sales proceeds
    of $306,525 were transferred to the asset exchange company, to
    facilitate a section 1031 exchange. That same month, the parties
    also sold Cebolla. Duerkson testified that $6,707 in net proceeds
    from the sale of Cebolla were also transferred to the asset
    exchange company. On September 7, 2011, $251,261 from the
    same asset exchange company was used to make the down
    payment on Windsor Way.5 Duerkson established that the asset
    exchange company held proceeds from the sale of Kazan and
    Cebolla and then transferred those funds to make the down
    payment on Windsor Way. This testimony adequately traced
    Husband’s separate property to Windsor Way. The trial court
    5Husband’s reimbursement claim decreased by about
    $20,000, from $272,000 to $251,261, because Duerkson reviewed
    a buyer’s final settlement statement showing a payment that did
    not come from the intermediary. Duerkson assumed those funds
    came from the community, rather than Husband’s separate
    property, because he could not trace the source of the funds.
    17
    erred when it rejected Husband’s reimbursement claim based on
    inadequate tracing.
    Vanguard IRA. Before the marriage, Husband’s IRA
    was in his name alone. There is no evidence pre-marital
    contributions to the IRA came from any source other than his
    income. Duerkson used account statements and tax returns to
    document contributions made to the IRA both before and after
    the marriage. He presumed all contributions made before
    marriage were Husband’s separate property and all contributions
    made after marriage were community property. As a result of
    these calculations, Duerkson allocated 56% of the IRA to
    Husband’s separate property and the remaining 44% to
    community property. He allocated returns according to the same
    proportionate shares.
    Duerkson concluded that, as of 2019, the balance in
    the Vanguard IRA was $501,451. Based on his analysis of
    contributions made before and after marriage, Duerkson
    allocated $277,487 of the balance to Husband’s separate property;
    the remaining $223,964 was allocated to community property.
    In compliance with the status only judgment, one-
    half of the entire Vanguard IRA was transferred to Wife’s rollover
    IRA. Duerkson opined that Husband was entitled to
    reimbursement of his separate property interest, requiring a
    payment from Wife of $138,744.
    The trial court’s statement of decision did not
    mention the Vanguard IRA. The judgment on reserved issues
    made no specific findings relating to the asset, except that it
    “denie[d] [Husband’s] separate property allocation claim” with
    respect to the rollover IRA in Wife’s name.
    18
    Husband contends the trial court erred because it
    failed to make any factual findings on his claim that he was
    entitled to a reallocation of the Vanguard IRA to account for his
    separate property interest. Wife contends the status only
    judgment was a final decision on the division of the IRA.
    Alternatively, she contends Husband failed to prove the amount
    of his separate property.
    We reject Wife’s contention that the status only
    judgment finally determined her interest in the Vanguard IRA.
    The judgment expressly states that the court reserves jurisdiction
    over the division of property and that it divided the IRA to
    “preserve the ability of [Husband] to defer distribution of his or
    her community interest on the death of the IRA owner.” The
    status only judgment was not a final judgment on the division of
    the Vanguard IRA.
    We further conclude the trial court erred when it
    failed to make findings regarding Husband’s separate property
    contributions to the Vanguard IRA. (Parker, supra, 187
    Cal.App.3d at p. 211.) Because the trial court made no express
    factual findings on this issue, we cannot infer facts in support of
    the judgment. (Code Civ. Proc., § 634; Ruiz, supra, 47
    Cal.App.4th at p. 521.) We will remand the matter to permit the
    trial court to make findings on Husband’s separate property
    interest in the Vanguard IRA and the appropriate division of that
    account.
    DISPOSITION
    The judgment on reserved issues is reversed with
    respect to the Mission Ridge Road, Windsor Way and Chrisanta
    Drive properties and the Vanguard IRA. On remand, the trial
    court is instructed to calculate the parties’ separate property and
    19
    community property interests in these assets and to award
    section 2640 reimbursement consistent with this opinion.
    Appellant is awarded his costs on appeal.
    NOT TO BE PUBLISHED.
    YEGAN, J.
    We concur:
    GILBERT, P. J.
    PERREN, J.
    20
    Colleen K. Sterne, Judge
    Superior Court County of Santa Barbara
    ______________________________
    California Appellate Law Group, Charles Kagay and
    Robert A. Roth, for Appellant.
    Griffith & Thornburgh and John R. Rydell II, for
    Respondent.
    

Document Info

Docket Number: B304323M

Filed Date: 9/13/2021

Precedential Status: Non-Precedential

Modified Date: 9/13/2021