In Re Marriage of Bankovich

Citations: 203 Cal. App. 3d 49; 249 Cal. Rptr. 713; 1988 Cal. App. LEXIS 670; 1988 WL 76733Docket: D005940

Court: California Court of Appeal; July 26, 1988; California; State Appellate Court

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Kathryn M. Bankovich appeals a judgment requiring her to reimburse her husband, Stephen G. Bankovich, for his separate property contribution to their former residence, as mandated by Civil Code section 4800.2. This section entitles a party to reimbursement for separate property contributions towards community assets unless a written waiver is executed. The court highlighted that an amendment to section 4800.1, effective January 1, 1987, extended this reimbursement to property acquired before the enactment of section 4800.2. However, the court found this retroactive application unconstitutional, as it would infringe on vested property rights without due process. 

The couple purchased a home in 1980, with Stephen contributing $22,800 from his inheritance for the down payment, and the property was held in joint tenancy without any agreement to maintain the contribution as separate. Following their separation and the sale of the house, the court determined that Kathryn owed Stephen $18,468.05, corresponding to his separate property contribution, under section 4800.2. Historically, prior to section 4800.2, separate property contributions were treated as gifts to the community without a contrary agreement, as established in In re Marriage of Lucas. The intent of the legislature was to apply section 4800.2 to all dissolution actions filed after January 1, 1984, including those pending at that time. However, the Supreme Court's decisions in In re Marriage of Buol and In re Marriage of Fabian ruled the retroactive application of section 4800.2 unconstitutional, reinforcing the principle that such retroactive laws violate due process by impairing vested rights. Consequently, the appellate court reversed the portion of the judgment requiring reimbursement.

Husband in Fabian invested his separate property into a community asset during marriage but could not prove a Lucas agreement, leading to the presumption he gifted his property to the community. While his appeal was ongoing, section 4800.2 was enacted, but the court declined to apply it retroactively, emphasizing that such application should be rare and only when it serves a significant state interest. The court found that retroactive application would not meaningfully advance the state's interest in equitable dissolution and would disrupt existing property rights. It noted that under the prior Lucas law, the contributing party had the ability to maintain separate property through an agreement. The court limited its decision to cases pending as of January 1, 1984, leaving open questions about the constitutional application of section 4800.2 to property acquired before that date. Following this decision, the Legislature enacted new legislation attempting to clarify the application of sections 4800.1 and 4800.2 to actions filed after January 1, 1984, regardless of the property acquisition date, citing confusion among family law practitioners. However, appellate courts determined that section 4800.2 could not constitutionally apply to property acquired before the statute's effective date. In In re Marriage of Griffis, the trial court ruled against applying section 4800.2 to property acquired and improved before 1984, reaffirming that property rights vest upon acquisition and cannot be altered unless necessary to serve a significant state interest. The court upheld the Supreme Court's view that no significant state interest justified impairing vested property rights, despite legislative assertions.

In August 1986, the Legislature amended section 4800.1 to include a specific declaration of intent aimed at ensuring uniformity in the treatment of property acquired by spouses in joint title. The amendment establishes that: 1) the state's public policy seeks consistent standards for proving the character of such property and for allocating community and separate interests; 2) existing laws have led to confusion regarding the application of property rights, making it difficult for spouses to have reliable expectations and for attorneys to provide accurate legal advice; 3) a compelling state interest exists for uniform treatment of property, leading to the retroactive application of sections 4800.1 and 4800.2 to all jointly held property regardless of when it was acquired or when agreements affecting its character were made, applicable to proceedings after January 1, 1984. However, these sections do not apply to property settlement agreements or judgments rendered before January 1, 1987. The case at hand, with a judgment dated February 20, 1987, is subject to the amended section. Despite the Legislature's intent to overcome judicial precedent and constitutional scrutiny by declaring a state interest in uniformity, the amendment fails to address the constitutional limitations regarding property rights acquired before January 1, 1984. The courts have established that mere legislative declarations cannot create a compelling state interest sufficient to interfere with vested property rights. Nonetheless, the amendment aims to resolve previous criticisms about the retroactive application of writing requirements, ensuring a uniform standard of proof for all jointly acquired marital property.

The Legislature has determined a compelling state interest in providing uniform treatment of property, specifically by applying section 4800.1 to all joint title acquisitions. This response addresses the Buol criticism regarding the lack of uniformity in the division of marital property. However, the legislative declaration alone does not justify retroactive application to property rights vested before January 1, 1984. The court concluded that while uniform treatment is a commendable goal, it does not warrant disrupting established property rights. The trial court's application of section 4800.2 regarding property division was incorrect, necessitating the reversal of the judgment related to the sale proceeds of the former residence. The case is remanded for proceedings consistent with this ruling, while the judgment is affirmed in all other respects. The urgency legislation enacted aims to clarify the application of sections 4800.1 and 4800.2 in family law proceedings, addressing confusion stemming from the Buol decision and ensuring equitable treatment in marital dissolution cases.