Opinion
H023422.
7-15-2003
In re The Marriage of MICHAEL and KATHRYN FRONTIERO. MICHAEL FRONTIERO, Appellant, v. KATHRYN FRONTIERO, Respondent.
Appellant Michael Frontiero appeals from a judgment on the reserved issues in a dissolution case. His former wife is respondent Kathryn Frontiero. Appellant contends that the trial court erred in setting an alternate valuation date for a community property asset. We agree and reverse the judgment.
I. Statement of Facts
In June 1994, appellant and respondent were married. They lived in respondents home in San Jose. In October 1994, their daughter Sabrina was born.
On September 15, 1995, respondent filed for a legal separation. A judgment of legal separation was entered on December 11, 1995. It granted legal and physical custody of their daughter to respondent, and ordered appellant to pay $ 200 per month in child support, provide health insurance for Sabrina, and obtain life insurance. Both parties waived spousal support. Respondent was awarded the 1994 tax refund, while appellant was awarded the 401(k) retirement benefits from Ceramic Tech.
Following the separation, the parties continued to live together. However, they had separate bedrooms and bank accounts. They shared household expenses and considered their income as separate property. Appellant purchased a truck, which he considered his separate property.
In January 1997, respondent sold the San Jose residence and received $ 83,000, which she used as a down payment on a residence in Hollister. Appellant had no savings at the time. The purchase price was $ 318,000. The parties took title to the Hollister residence as "Wife and Husband, as Joint Tenants." In February 1997, they moved into the residence.
In June 1998, the parties refinanced the loan on the residence. The title to the property did not change. At that time, the property was appraised at $ 330, 500. Within days of the refinancing, appellant moved out of the residence. Appellant never signed a quitclaim deed.
On April 13, 1999, appellant filed a petition for dissolution of marriage. He listed the Hollister residence as community property.
In November 1999, a status only dissolution judgment was entered. Trial on the reserved issues was held on February 5, March 2, and April 27, 2001. At the time of trial, the Hollister residence was appraised at $ 596,000. The trial court found that the date of separation was December 11, 1995. The trial court also found that the Hollister residence was an omitted asset of the community property, chose an alternate valuation date of June 1998, and ordered that respondent pay appellant $ 6,250.
II. Discussion
Appellant contends that the trial court erred by applying the exception of section 2552, subdivision (b) to value the Hollister residence as of June 1998 rather than the date of trial.
Family Code section 2552 states in full: "(a) For the purpose of division of the community estate upon dissolution of marriage or legal separation of the parties, except as provided in subdivision (b), the court shall value the assets and liabilities as near as practicable to the time of trial. [P] (b) Upon 30 days notice by the moving party to the other party, the court for good cause shown may value all or any portion of the assets and liabilities at a date after separation and before trial to accomplish an equal division of the community estate of the parties in an equitable manner."
The alternate valuation date provision "was designed to remedy certain inequities such as when the hard work and actions of one spouse alone and after separation . . . greatly increases the community estate which must then be divided with the other spouse. In this regard, Family Code section 2552, subdivision (b) gives the trial court considerable discretion to divide community property in order to assure an equitable settlement is reached. [P] Where, as here, the trial court is vested with discretionary powers, we review its ruling for an abuse of discretion. As long as the court exercised its discretion along legal lines, its decision will be affirmed on appeal if there is substantial evidence to support it." (In re Marriage of Duncan (2001) 90 Cal.App.4th 617, 625, internal citations and quotation marks omitted.)
Since an alternate valuation date is an exception, it should not be chosen unless there is no other way to accomplish an equitable division of the community estate. (In re Marriage of Reuling (1994) 23 Cal.App.4th 1428, 1435.) Good cause for an alternate valuation date is established where the community asset is a business that has increased or decreased in value due to one spouses services after separation. (In re Marriage of Duncan, supra, 90 Cal.App.4th 617, 625-627; In re Marriage of Imperato (1975) 45 Cal. App. 3d 432, 436, 119 Cal. Rptr. 590; In re Marriage of Stevenson (1993) 20 Cal.App.4th 250, 254; In re Marriage of Green (1989) 213 Cal. App. 3d 14, 20-21, 261 Cal. Rptr. 294.)
However, where the fluctuations in value are beyond the managing spouses control, the community asset is valued as of the date of trial. In In re Marriage of Priddis (1982) 132 Cal. App. 3d 349, 183 Cal. Rptr. 37, the trial court valued the community residence as of the date of separation, which occurred over 11 years prior to trial. The asset had increased significantly in value during this period. The reviewing court stated that "when the value of community assets has been affected by inflation or other market factors, the fairest equal division of those assets lets the parties share equally in either gains or losses." (Id. at pp. 357-358.) The court rejected the argument that a lengthy separation necessitated an alternate valuation date. (Id. at p. 358; see also In re Marriage of Walters (1979) 91 Cal. App. 3d 535, 539, 154 Cal. Rptr. 180.)
As in Priddis, here the increase in value was not due to respondents efforts and skill after separation, but rather the substantial increase in property values in the area. Both parties remained liable for the mortgage payment even after appellant moved out of the residence. It is only fair that both parties share in the increase in value. Thus, the trial court erred by setting an alternate valuation date of June 1998. However, since respondent paid the down payment with her separate property and made certain improvements, she is entitled to reimbursement of those amounts. (Fam. Code, § 2640.)
Respondent contends that the residence was not community property, because it was purchased almost two years after the judgment of separation. However, Family Code section 772 does not support her contention. Section 772 provides that after a judgment of legal separation, the earnings or accumulations of each party are his or her separate property.
Respondent also focuses on the evidence that appellant promised to quitclaim the property to her, but failed to do so. Family Code section 2581 states that "property acquired by the parties during marriage in joint form, including property held in tenancy in common, joint tenancy, or tenancy by the entirety, or as community property, is presumed to be community property." Respondent did not offer any evidence to rebut this presumption by showing either "[a] clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is separate property and not community property" or "proof that the parties have made a written agreement that the property is separate property." (Fam. Code, § 2581; see also In re Marriage of Haines (1995) 33 Cal.App.4th 277, 290-291.) Accordingly, the evidence introduced by respondent did not rebut the presumption.
Since we reverse the judgment, we need not consider the issue of respondents failure to file a timely motion seeking an alternate valuation date of the Hollister residence.
III. Disposition
The judgment is reversed. The matter is remanded for a determination of the value of the community asset as of the time of trial as well as the amounts, if any, of reimbursement for separate property contributions. The parties shall bear their own costs on appeal.
WE CONCUR: Rushing, P.J., and Elia, J. --------------- Notes: According to respondent, appellant was included on the title in order to help her qualify for a loan. Bradley Beaudetter, a loan officer for Amerimac Cal-West, testified that he explained the quitclaim process to appellant and that appellant agreed to sign a quitclaim deed after escrow closed.