Opinion
D069637
02-22-2017
In re the Marriage of DANA and ROBERT HANS. DANA HANS, Respondent, v. ROBERT HANS, Appellant.
Patrick J. McCrary for Appellant. A. Stephen Rocha for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. D525350) APPEAL from a judgment of the Superior Court of San Diego County, Robert C. Longstreth, Judge. Reversed in part and remanded with directions. Patrick J. McCrary for Appellant. A. Stephen Rocha for Respondent.
The primary issue in this family law appeal is the proper characterization of real property. During their marriage, Robert and Dana Hans purchased a home on Red Hawk Lane (Red Hawk) in Robert's name only, using Robert's separate property for the down payment and obtaining a loan for the remainder of the purchase price. As of March 2015, the Red Hawk property was appraised at $925,000.
We refer to the parties by their first names for the sake of clarity and ease of reference. (In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 338, fn. 1.)
Robert appeals from the judgment entered after the court found (1) the Red Hawk property was community property; (2) under Family Code section 2640, Robert was entitled to be reimbursed for his separate property contribution; and (3) the remaining equity in the property should be equally divided between Robert and Dana.
Unless stated otherwise, all statutory references are to the Family Code.
On appeal, Robert makes two arguments in the alternative. First, he contends the court should have given greater weight and "evidentiary value" to a report by a special master, who recommended the Red Hawk property be characterized as Robert's separate property, subject to a community reimbursement of $207,358.42.
Second, relying on In re Marriage of Bonvino (2015) 241 Cal.App.4th 1411 (Bonvino), Robert contends the court should have (a) characterized Red Hawk as a mixed asset consisting of both Robert's separate property (down payment) and community property (loan proceeds); (b) determined Robert's separate property interest in proportion to the separate property funds he contributed; and (c) awarded Robert a pro rata interest in the property's appreciation, rather than limiting him to only reimbursement of his separate property contribution.
We reject Robert's first argument, but agree this case come squarely within Bonvino, supra, 241 Cal.App.4th 1411. Where, as here, one party makes a separate property contribution to a solely titled asset acquired during marriage, only the general community property presumption of section 760 applies, and not the title presumption of section 2581. Accordingly, Robert may rebut the presumption that the Red Hawk property is a community asset by tracing his separate property contribution, and thus establish an ownership interest in proportion to his equity contribution. (Bonvino, at p. 1422.) The portion of the judgment concerning the Red Hawk property is reversed and the matter is remanded for further proceedings.
Bonvino, supra, 241 Cal.App.4th 1411 was decided only three days before the trial court entered judgment in this case and was not raised by Robert until this appeal. Our reversal of the judgment is compelled by Bonvino and is not a reflection on the trial court's handling of this case. Although generally appellate courts will not consider new theories raised for the first time on appeal, an exception exists where a new point of law is decided after the trial court proceedings. (See RN Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511, 1518.)
FACTUAL AND PROCEDURAL BACKGROUND
A. Evening Creek Property
Robert and Dana married each other in October 1993 and after a nearly 17-year marriage, Dana filed for dissolution in October 2010. In August 1993—before the marriage—Robert purchased a home on Evening Creek Drive in San Diego (Evening Creek). From approximately December 1995 through August 2005, Robert and Dana refinanced the Evening Creek property several times. In connection with a refinancing application in 1994, Robert handwrote and signed a quitclaim deed conveying the Evening Creek property to himself and Dana as "husband and wife as joint tenants." However, Robert cancelled that application and never obtained that loan. He assumed the lender never recorded that quitclaim deed; however, it was recorded. Later, however, in conjunction with other refinancing, Dana executed quitclaim deeds, granting the property to Robert as his sole and separate property.
Occasionally, the briefs refer to Evening Creek as Evening Shade. The attorneys made the same mistake at least twice during trial, but corrected themselves.
B. Red Hawk Property
In September 2009 Robert sold the Evening Creek property. On March 2, 2010, he purchased the Red Hawk property, taking title as "Robert J. Hans, a married man as his sole and separate property." Dana signed an interspousal transfer grant deed, granting the property to Robert "a married man as his sole and separate property," which was recorded the same day.
The appellant's appendix contains the Red Hawk property deed of trust, showing the borrower as "Robert J. Hans, a married man as his sole and separate property." The record does not contain the actual grant deed. The parties assume the form of title as stated in the trust deed is the same as that in the grant deed, and therefore we make the same assumption.
It is undisputed that in purchasing the Red Hawk property, Robert contributed $230,265.81 of separate property funds from the sale of the Evening Creek property, and the balance was paid by community property contributions (loan proceeds).
C. Trial
In May 2015 the court (the Honorable Robert C. Longstreth) conducted a trial to determine, among other issues, the parties' respective interests in the Evening Creek and Red Hawk properties.
1. Evening Creek property
Dana challenged the validity, as between herself and Robert, of the quitclaim deeds she signed transferring to Robert her community interest in Evening Creek. She testified she had bad credit, and Robert and the loan officers instructed her to sign quitclaim deeds to obtain better financing terms. Dana testified she did not understand these deeds purported to assign her share of the community property to Robert and, in any event, Robert promised he would restore her to the Evening Creek title later.
Robert's testimony contradicted Dana's on this issue. He denied promising to transfer Evening Creek back to Dana after obtaining refinancing. He also testified the loan officers explained to Dana that by signing the quitclaim deeds, she was transferring the property to him.
The court found Robert's testimony on these points more credible than Dana's. The court found it significant that the Evening Creek home, which Robert purchased before the marriage, started as Robert's separate property. The court determined that even if Robert transmuted his interest to the community by his handwritten 1994 quitclaim deed, Dana's quitclaim deeds validly transmuted that interest back to Robert's separate property. Accordingly, the court found the Evening Creek property to be Robert's separate property. The court also determined there was no community interest in the Evening Creek property.
The court's determinations as to the Evening Creek property are not challenged on appeal.
2. Red Hawk property
Unlike the Evening Creek property, the Hanses purchased the Red Hawk property during marriage. The court asked Robert's attorney, "Why wouldn't [it] be community property?" Robert's attorney replied, "Because she signed a quitclaim deed to it and it's taken in his name only."
However, there was no evidence explaining why Dana would have quitclaimed her interest in the Red Hawk property to Robert. The court determined there was a presumption that Dana executed the quitclaim deed as a result of undue influence, and there was no evidence offered to rebut the presumption. The court stated, "The only evidence is, 'We did this and I got something good for me and bad for her,' and there's no explanation as to why that happened. It does not rebut the presumption." The court additionally stated:
When an interspousal transaction advantages one spouse, "'"[t]he law, from considerations of public policy, presumes such transactions to have been induced by undue influence."'" (In re Marriage of Kieturakis (2006) 138 Cal.App.4th 56, 84.) Here, Robert, as the advantaged spouse, had the burden to rebut the presumption by establishing "the quitclaim deed was freely and voluntarily made, with a full knowledge of all the facts and with a complete understanding of the transfer." (In re Marriage of Mathews (2005) 133 Cal.App.4th 624, 631.)
"[T]hey've been married 16 years, buy a property during marriage that would be community property, where she signs over, for no reason proffered whatsoever, something that advantages him and disadvantages her and results in an unfair result, something that's detrimental to her . . . . [T]here has been no explanation of why it was done, that her rights were explained to her . . . ."
Having set aside Dana's quitclaim deed, the court determined "[t]he default is it's community property." The court added, "I've now determined that it's community property with a separate property contribution because I find that the quitclaim deed is invalid because it was the product of undue influence for all the reasons I've stated."
3. Judgment
The court entered judgment determining the Red Hawk property is community property. The judgment states Robert shall receive a reimbursement under section 2640 "for his separate property contributed towards the purchase of the home, in the amount of $230,265.81." The judgment provides that the "remaining equity in the home shall be equally split between the parties."
Under section 2640, subdivision (b), a party is entitled to reimbursement for his or her contributions to the acquisition of a community property asset to the extent those contributions are traced to a separate property source. The amount reimbursed under this statute does not include interest or appreciation, and cannot exceed the net value of the property at the time of division. (See Bonvino, supra, 241 Cal.App.4th at p. 1432.)
DISCUSSION
I. ISSUES INVOLVING THE SPECIAL MASTER'S REPORT
A. Factual Background
In May 2011 Dana's attorney filed a motion asking the court to appoint a special master to calculate the community property interest in the Red Hawk property. Robert's attorney opposed this request.
After conducting a hearing, the court (Judge Huguenor) granted the motion to appoint a special master to determine, among other things, "[t]he amount of community property interest in the Red Hawk Lane home."
The court (the Honorable Susan D. Huguenor) also ordered the parties to "meet and confer to select a special master", and they selected Robert F. Wesley to be special master. Mr. Wesley issued his final report in December 2012. He died in September 2014, before the trial occurred.
In December 2012 the special master filed his "Final Report" (report). According to the report, the special master met with both parties, reviewed relevant documents, issued a preliminary report, reviewed both parties' response to the preliminary report, and met with the parties and their attorneys in an unsuccessful attempt to reach a settlement.
The special master "recommend[ed]" the court find that Dana transmuted her community property interest in the Red Hawk property to Robert by her interspousal transfer grant deed. Accordingly, the special master stated he could "only recommend . . . that the Red Hawk property is [Robert's] separate property subject to the community's reimbursement of $207,358.42."
$207,358.42 is the sum of amounts the special master determined to be the community's reduction in the principal owed on the Red Hawk property.
Before trial started, the court and counsel discussed the extent to which the court should properly defer to the report. The court stated it would treat the special master as "being like a court-appointed expert." The court stated, "Well, the report either makes sense to me or it doesn't. I would review it de novo . . . ." The court stated, "It's not evidence. It might be a report to the Court. It's a communication to the Court. A communication to the Court is not evidence." The court further explained:
"[H]e's a special master looking at family law issues. You know, we're family law judges looking at family law issues. . . . [¶] . . . It's not like he's a structural engineer or something where I don't think I can put myself in his position and re-create what he's doing. . . . It's not going to be treated as anything else other than your assertion of how I should resolve something."
Ultimately, after hearing testimony and applying relevant law, the court declined to follow the special master's recommendation that the Red Hawk property be characterized as Robert's separate property. Contrary to the special master's recommendation, the court determined Robert had not rebutted the presumption of undue influence in obtaining Dana's interspousal grant deed to the Red Hawk property, and therefore the Red Hawk property was community property.
On appeal, Robert contends that although the court was not "bound by" the special master's report, the court erred in considering the issues de novo and in failing to give the special master's report a level of deference he calls "evidentiary value."
B. Law
"The Code of Civil Procedure provides for two types of reference." (Jovine v. FHP, Inc. (1998) 64 Cal.App.4th 1506, 1521 (Jovine). A "general" reference is conducted under Code of Civil Procedure section 638, subdivision (1), which authorizes the trial court to refer any or all issues to a referee for trial and determination, provided the parties have agreed to that procedure. Such agreement is required to comport with the constitutional prohibition against delegation of judicial power. (Jovine, at pp. 1522-1523.) In a general reference, the "finding and determination of the referee upon the whole issue must stand as the finding of the court and judgment may be entered thereon in the same manner as though the matter had been tried by the court." (Id. at p. 1522.)
Code of Civil Procedure section 638 provides in part: "A referee may be appointed upon the agreement of the parties filed with the clerk, or judge, or entered in the minutes, or upon the motion of a party to a written contract or lease that provides that any controversy arising therefrom shall be heard by a referee if the court finds a reference agreement exists between the parties: (a) To hear and determine any or all of the issues in an action or proceeding, whether of fact or of law, and to report a statement of decision."
In contrast, "[a] 'special' reference is one conducted pursuant to [Code of Civil Procedure] section 639." (Jovine, supra, 64 Cal.App.4th at p. 1522.) Under that statute, the consent of the parties is not required. (Ibid.) However, in such cases, although the special master's findings are entitled to great weight, they are advisory only, and not binding on the trial court. (Ibid.) The court must independently consider the special master's findings before acting. (Ruisi v. Thieriot (1997) 53 Cal.App.4th 1197, 1208.) Indeed, Code of Civil Procedure section 643 provides that when a special reference is made, the court retains the power to "modify or disregard the referee's recommendations" and "this overriding power may be exercised at any time . . . ."
Code of Civil Procedure section 639, subdivision (a)(3) provides in part: "When the parties do not consent, the court may, upon the written motion of any party, or of its own motion, appoint a referee . . . [w]hen a question of fact, other than upon the pleadings, arises upon motion or otherwise, in any stage of the action."
"This statutory scheme carefully preserves the distinction which must be maintained between general and special references in order to comply with the constitutional mandate regarding the delegation of judicial power. (1) '[A] general reference has binding effect, but must be consensual, whereas a special reference may be ordered without consent but is merely advisory, not binding on the . . . court.'" (Jovine, supra, 64 Cal.App.4th at pp. 1522-1523.)
Here, because the court appointed a special master over Robert's objection, the parties agree the reference was under Code of Civil Procedure section 639.
C. Waiver
Robert concedes the court was not "bound by" the special master's report. However, he contends the court erred in failing to give the report "evidentiary value," which he defines as having persuasive force greater than being "merely tantamount to argument by counsel."
Even assuming, for the sake of argument, the court erred in not giving the report "evidentiary value," Robert waived any such error. "[A]n appellant waives the right to attack error by expressly or implicitly agreeing or acquiescing at trial to the ruling or procedure objected to on appeal." (In re Marriage of Broderick (1989) 209 Cal.App.3d 489, 501.) Here, on two separate occasions, Robert's attorney, Patrick McCrary, told the court he agreed the special master's report is not evidence and should be treated as being tantamount to argument by counsel:
"The Court: Are you arguing it's evidence?
"Mr. McCrary: I believe the court can rely upon it, whether you consider it evidence or not, but —
"The Court: I'm not going to consider it evidence. I can rely on it if it makes sense. Just like any other piece of paper that comes in front of me, I can rely on if it makes sense.
"Mr. McCrary: Right." (Italics added.)
Later, addressing McCrary, the court again stated it would consider the special master's report as if it was argument by counsel. McCrary stated he agreed with that approach:
"The Court: With all respect of Mr. Wesley, you know, I understand and everything like that, but like I said, either his arguments make sense or they don't. And, you know, whether you're making them or he's making them, I still—I think I still have to look at them de novo and decide whether it makes sense.
"Mr. McCrary: I agree with that." (Italics added.)
D. No Error
In any event, even if Robert had not waived the issue, his assertion the court was compelled to give the special master's report some heightened evidentiary value is unpersuasive. A trial court may properly give great weight to a special master's report on a complex accounting problem or similar issue that involves technical areas or specialized knowledge beyond the expertise of the family court. In fact, the special master procedure "is most commonly employed where complicated accounts can more conveniently be examined or taken outside of court . . . ." (In re Marriage of Petropoulos (2001) 91 Cal.App.4th 161, 176.)
But here, the special master was asked to consider rudimentary facts and law squarely within the court's expertise—namely, the facts surrounding Dana's execution of quitclaim and/or interspousal grant deeds and the case law involving the presumption of undue influence that arises from such transactions.
Accordingly, the court was in at least as good a position as was the special master to hear and consider the relevant evidence, weigh credibility, and apply the law. These issues consumed most of the trial testimony in this case. After hearing the evidence, there was no logical or practical reason for the court to give any deference at all to the special master's report deciding the same factual and legal issues.
Robert's attorney complains that unless the special master's report is given deference, the parties have wasted money on what amounts to a nonbinding mediation. However, this is an argument best directed to the trial court in opposing a motion to appoint a special master and not a valid reason for deferring to a special master's report on basic facts and law within the court's own knowledge after a short trial. Trial courts need not defer to findings made in a special reference, which involves the same factual and legal issues subsequently tried to the court, merely to give the parties a sense they got their money's worth.
II. THE COURT ERRONEOUSLY CHARACTERIZED
THE RED HAWK PROPERTY AS COMMUNITY PROPERTY
A. The Standard of Review
"The court's characterization of property as community or separate determines the division of the property between spouses in a marital dissolution proceeding." (Bonvino, supra, 241 Cal.App.4th at p. 1421.) Generally, appellate review of a trial court's finding that a particular item is separate or community property is limited to a determination of whether any substantial evidence supports the finding. (Ibid.)
B. Characterization of the Red Hawk Property
"'The character of property as separate or community is determined at the time of its acquisition.'" (Bonvino, supra, 241 Cal.App.4th at p. 1422.) Property that a spouse acquired before the marriage is that spouse's separate property. (§ 770, subd. (a)(1).)
The separate or community property character of property is not affected by a mere change in form or identity. Absent a preemptive statute or the parties' joint agreement or action, property derived from a separate property source remains separate property. (Bonvino, supra, 241 Cal.App.4th at p. 1423.)
For purposes of a marital property division upon dissolution, a community property presumption attaches to property acquired by spouses in "joint form." (§ 2581.) The presumption under section 2581 may be rebutted only by a writing executed by the parties stating the joint title property is separate property. Where the section 2581 presumption applies, tracing to a separate property source will not suffice to rebut the community property presumption, although it may support a statutory right to reimbursement. (§§ 2581, subd. (a) & (b); 2640, subd. (b).)
Section 2581 provides: "For the purpose of division of property on dissolution of marriage or legal separation of the parties, 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. This presumption is a presumption affecting the burden of proof and may be rebutted by either of the following: [¶] (a) 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. [¶] (b) Proof that the parties have made a written agreement that the property is separate property."
In this case, section 2581 does not apply because the Red Hawk property was not acquired by Robert and Dana in joint form. Title was taken to that property as "Robert J. Hans, a married man as his sole and separate property."
Section 760 is another statute that provides a presumption of community property status. Under that statute, it is presumed that property acquired during the marriage is community property.
Section 760 provides: "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." --------
This presumption under section 760 applies to the Hanses' purchase of the Red Hawk property because they purchased that property during their marriage. However, unlike the community presumption that arises under section 2581, the presumption under section 760 may be rebutted by "[v]irtually any credible evidence . . . including tracing to a separate property source." (Bonvino, supra, 241 Cal.App.4th at p. 1423.)
Here, payment for the Red Hawk property was traced to both separate and community funds. It is undisputed that Robert used his separate property funds of $230,265.81 for the down payment. The remainder of the purchase price was paid with loan proceeds. "The character of property acquired on credit is determined by whether the lender intended to rely on separate or community property." (Bonvino, supra, 241 Cal.App.4th at p. 1423.) "Loan proceeds acquired during marriage are presumed to be community property." (Ibid.) "This presumption can be rebutted by showing the lender intended to rely on the spouse's separate property alone. (Ibid.) "'Without satisfactory evidence of the lender's intent, the general presumption prevails.'" (Ibid.)
In determining the Red Hawk property is community property, the trial court impliedly found the lender intended to rely on community property and the loan proceeds were community property. (See Bonvino, supra, 241 Cal.App.4th at p. 1424.) Robert concedes there is no evidence rebutting the presumption the loan proceeds are community property.
Therefore, in this case, the source of payments to acquire the Red Hawk property is traced to both separate and community contributions, namely Robert's separate property down payment and the community's loan proceeds. As a result, the Red Hawk property is properly characterized as an asset consisting of both separate and community property. (See Bonvino, supra, 241 Cal.App.4th at p. 1434 ["Husband's traceable separate property investment retained its separate property character, and both separate and community property interests were established in the property . . . ."].)
Accordingly, the trial court erred in characterizing the Red Hawk property as community property. There is no substantial evidence supporting that finding because Robert can rebut the presumption of community property status under section 760 by tracing to his separate property down payment.
C. The Court Erred in Applying Section 2640
In this case, after characterizing the Red Hawk property as community property, the court limited Robert to reimbursement of his separate property contribution under section 2640. Robert contends the court should not have applied section 2640, but instead should have given him a pro rata interest in the property (and thus a share of the appreciation in the Red Hawk property's value) based upon his separate property contribution. We agree with Robert's assertion.
Section 2640 provides a limited reimbursement of separate property contributions as part of the division of the community estate. Contributions to the acquisition of community property are reimbursed to the extent a party traces the contributions to a separate property source, unless the party waived the reimbursement right in writing or signed a writing that has the effect of a waiver. (§ 2640, subd. (b).) However, under section 2640, the amount reimbursed does not include interest or appreciation and cannot exceed the net value of the property at the time of division. (Ibid.) "Contributions" include funds used for down payments, improvements and the reduction of the principal of a loan that financed the purchase or improvement of the property. (§ 2640, subd. (a).) Contributions do not include the interest paid on the loan or payments for maintenance, insurance, or taxes. (Ibid.)
Section 2640 applies only where the court has first determined the asset in question is community property. This conclusion is compelled by the language of section 2640 itself, which requires reimbursement "for the party's contributions to the acquisition of property of the community property estate . . . ." (§ 2640, subd. (b).) As the court in Bonvino states, "Section 2640 does not purport to apply to separate property used during marriage to acquire an asset that retains its character as separate property. In order for section 2640 to apply, the asset purchased during marriage must be characterized as community property . . . ." (Bonvino, supra, 241 Cal.App.4th at p. 1433.)
Here, the court should not have applied section 2640 because, as explained ante, the Red Hawk property is not community property. Where, as here, an asset is solely titled, tracing permits the contributing party (Robert) to establish separate property ownership. Robert's separate property contribution gives him a percentage equity interest in the Red Hawk property, not merely a right to reimbursement. (Bonvino, supra, 241 Cal.App.4th at p. 1434.)
The facts in Bonvino, supra, 241 Cal.App.4th 1411 are nearly identical to the operative facts here. In Bonvino, the parties purchased a family home during marriage with a down payment from the husband's separate property funds and the proceeds of a community property loan. (Id. at pp. 1418, 1423.) Title to the property was taken in the husband's name alone, as a married man, as his sole and separate property. (Id. at p. 1419.) The wife signed a quitclaim deed of the property to the husband; however, the court set that deed aside because husband had not rebutted the presumption the wife executed that deed as the result of his undue influence. (Id. at pp. 1419, 1420-1421.)
On these facts—squarely identical to the facts here—the trial court in Bonvino held the property was a community asset even though husband used only separate property to make the down payment and took title in his name alone. Essentially, the trial court held the community was entitled to all the appreciation in the property's value, and husband was only entitled to reimbursement. (Bonvino, supra, 241 Cal.App.4th at pp. 1420-1421.) Husband appealed, asserting the court should have found that both separate and community interests were established in the property proportionate to the separate and community contributions to equity. The wife asserted the husband was only entitled to reimbursement of his separate property contributions without interest or appreciation, as provided in section 2640. (Bonvino, at p. 1422.)
The Court of Appeal in Bonvino, supra, 241 Cal.App.4th 1411 reversed, holding that where one party makes a separate property contribution to a solely titled asset acquired during marriage, only the general community property presumption of section 760 applies, and not the title presumption of section 2581. Accordingly, the party is entitled to trace that separate property contribution to establish an ownership interest in the asset "in accordance with the formula established in [In re Marriage of] Aufmuth [(1979) 89 Cal.App.3d 446] and [In re Marriage of] Moore [(1980) 28 Cal.3d 366]." (Bonvino, supra, 241 Cal.App.4th at p. 1434.)
Dana contends Bonvino, supra, 241 Cal.App.4th 1411 was wrongly decided and should not be followed. In Bonvino, and also here, the court found the husband failed to rebut the presumption of undue influence in obtaining the wife's quitclaim deed. (Id. at pp. 1420-1421.) Dana contends the result in Bonvino unjustly rewards a spouse who has been found to have exercised undue influence and breached his fiduciary duties.
We disagree with Dana's argument because the husband in Bonvino, and Robert here, are not rewarded for breaching any fiduciary duty. Giving Robert a pro rata equity interest in the property avoids the serious injustice that would otherwise occur where a spouse uses his or her separate property to acquire property that significantly increases in value during marriage. Moreover, the finding of undue influence had an adverse economic impact on the breaching spouse in Bonvino, and similarly does here. Once the wife's quitclaim deed was set aside in Bonvino, husband was precluded from relying on the state of title (as his sole and separate property) to determine the characterization of the property. (Bonvino, supra, 241 Cal.App.4th at p. 1430.) Similarly here, because Dana's interspousal transfer grant deed was set aside for undue influence, the Red Hawk property cannot be characterized as Robert's separate property. As a result, the community estate has an ownership interest in the equity of the property.
Dana also contends Bonvino should not be followed because its holding is "not supported by precedent nor logic." She paraphrases the holding in Bonvino, supra, 241 Cal.App.4th 1411 as follows: "[I]n order for a court to provide a reimbursement pursuant to [section 2640], the court must first find that the separate property contribution used towards the acquisition of the community property during the marriage must have been transmuted to the community pursuant to [section 852]." Dana contends the Bonvino court "provides no legal nor logical basis whatsoever to create this prerequisite to the application of [section 2640] when separate property contributions are made towards the acquisition of community property during the marriage." She asserts the holding in Bonvino "directly ignores the [l]egislative intent behind [section 2640] which was specifically enacted to counter the holding of In re Marriage of Lucas (1980) 27 Cal.3d 808 . . . of how marital courts shall address separate property contributions used towards the acquisition of community property."
This argument fails because it is based on a misunderstanding of the Bonvino court's holding regarding section 2640. Bonvino holds that section 2640 only applies where the court has first held the asset in question is community property. (Bonvino, supra, 241 Cal.App.4th at p. 1433 ["In order for section 2640 to apply, the asset purchased during marriage must be characterized as community property . . . ."].) As noted ante, that holding is compelled by the plain language in section 2640, and Bonvino does not create new law on this issue.
It is true, as Dana notes, that the Bonvino court stated, "We conclude that the transmutation provisions of section 852 must be satisfied to change the character of separate property to community property before the reimbursement provisions of section 2640 apply." (Bonvino, supra, 241 Cal.App.4th at p. 1432.) However, recognizing that no transmutation occurred in Bonvino, the court is simply making the point that for section 2640, subdivision (b) to apply at all, the property must be determined to be community property, and, where an asset is solely titled, that will not occur where tracing will establish a separate property equity interest. The court was stating the section 2640 reimbursement ordered by the trial court in Bonvino was improper because the husband had not transmuted his separate property interest in the family home to community property.
Dana also contends the analysis in Bonvino, supra, 241 Cal.App.4th 1411 is flawed because "[a]ccording to Bonvino's holding, the presumption that property acquired during the marriage is community will never apply if there is a separate property contribution made toward the acquisition of said property." (Italics added.) However, Dana's argument is again based on a misreading of Bonvino.
In Bonvino, as here, title was not taken in both parties' names. (Bonvino, supra, 241 Cal.App.4th at p. 1419) Therefore, the joint title presumption of section 2581 did not apply in Bonvino, and it likewise does not apply here. As a result, the community property presumption arising from section 760 applies, and that presumption (unlike the presumption under section 2581) may be rebutted by tracing.
Contrary to Dana's assertion, Bonvino does not hold that a community property presumption will "never apply if there is a separate property contribution made toward the acquisition of said property." The key fact here, as in Bonvino, is the case involves sole title. Because Robert did not take title in both parties' names, the joint title presumption of section 2581 did not apply, and therefore Robert was able to rebut the community property presumption arising under section 760 by tracing to his separate property funds used for the down payment.
The same result would not have occurred —that is, the community property presumption would not have been rebutted and would have applied—if title had been taken in both Robert's and Dana's names, triggering the joint title presumption under section 2581. (See In re Marriage of Haines (1995) 33 Cal.App.4th 277, 291 [tracing cannot rebut the community property presumption under section 2581], disapproved on another point in In re Marriage of Valli (2014) 58 Cal.4th 1396, 1404.)
DISPOSITION
The portion of the judgment concerning the Red Hawk property is reversed and the matter is remanded for further proceedings in accordance with this opinion. In all other respects, the judgment is affirmed.
In the interest of justice, each party to bear his or her own costs on appeal.
NARES, J. WE CONCUR: BENKE, Acting P. J. O'ROURKE, J.