In Re Marriage of Reilley

Citations: 196 Cal. App. 3d 1119; 242 Cal. Rptr. 302; 1987 Cal. App. LEXIS 2406Docket: H000754

Court: California Court of Appeal; December 8, 1987; California; State Appellate Court

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Judith Reilley appeals a dissolution of marriage judgment, asserting errors in property division and support awards. The couple married in 1969 and separated in 1981, with Timothy filing for dissolution in 1983. The trial court's judgment included a division of their community property, specifically a second home in Aptos, California, which they purchased for $90,000. After separation, Timothy remodeled the home at a cost of $55,977, using separate property earnings to add bedrooms and a bathroom for their children. The court awarded the home to Timothy and ordered reimbursement for the remodeling costs under Civil Code section 4800.2, which mandates reimbursement for improvements made with separate property. Judith contends this reimbursement was erroneous, as the statute's application conflicts with a California Supreme Court ruling that deemed it unconstitutional for retroactive cases. Consequently, the appellate court found the trial court's calculations for reimbursement incorrect and noted the absence of a required statement of decision on support issues, resulting in a reversal of the judgment.

Husband relies on judicial precedent rather than section 4800.2 for reimbursement claims regarding expenditures made after separation for community obligations. Citing *In re Marriage of Epstein*, the Supreme Court ruled that a spouse may seek reimbursement for amounts spent post-separation on preexisting community debts, emphasizing that the presumption against reimbursement for the use of separate property in community contexts does not apply after separation. However, reimbursement is inappropriate in specific situations, such as mutual agreements against it or when payments fulfill a spousal support obligation. 

The court acknowledged that Husband's improvements to the Aptos residence, funded by his separate income after separation, do not imply he intended a gift to the community, a point Wife does not contest seriously. Nevertheless, Wife argues that reimbursement should not equal the total amount Husband spent on improvements, as the property's value may not have increased significantly, making full reimbursement potentially inequitable and erasing community equity. This perspective aligns with *In re Marriage of McNeill*, where denial of reimbursement was based on inadequate records and lack of value added by separate funds spent on community property improvements. 

The court finds this reasoning reasonable and notes that the trial court did not consider this reimbursement approach due to the initial assumption that section 4800.2 required dollar-for-dollar reimbursement. Therefore, the issue is remanded for the trial court to reassess Husband's reimbursement entitlement, allowing for considerations beyond mere increase in property value, potentially including equitable factors even when community property is improved post-separation.

Evidence may indicate that the parties either agreed to an asset improvement or that such improvement was necessary for asset preservation, with the trial court given discretion to consider these factors. The wife requests a revaluation of the Aptos house, initially stipulated at $120,000, after the husband allegedly sold it for $160,000 post-trial. When a judgment is reversed, the trial court can relieve parties of prior stipulations. Previous cases illustrate that it is an abuse of discretion to deny a motion to reconsider asset value after a sale occurs at a higher price than previously determined. 

Regarding the support order, the wife argues the judgment should be reversed due to the trial court's failure to provide a statement of decision on child and spousal support amounts. During the trial, a statement of decision was requested, but the trial court did not prepare one, as neither party was designated to do so. Under Code of Civil Procedure section 632, a statement of decision is required upon request, explaining the factual and legal basis for the court's decisions. Without this statement, the court's findings regarding the husband’s income, the wife’s earning potential, and the family’s financial needs remain unclear. The omission complicates future modifications of support orders, as established in relevant case law.

A failure to provide a statement of decision after a timely request constitutes reversible error, as established in In re Marriage of S. (1985). Consequently, the judgment is reversed and remanded for reassessment of the husband's reimbursement for improvements made on the Aptos property, as well as for a statement of decision regarding child and spousal support. The trial court will determine costs and attorney's fees related to the appeal. 

Civil Code section 4800.2 mandates reimbursement for contributions to community property unless a written waiver exists. This reimbursement includes down payments, improvement payments, and principal reductions on loans but excludes interest, maintenance, insurance, or tax payments. The case also references In re Marriage of Lucas (1980), which clarifies that reimbursement for separate property used for community purposes requires an agreement between parties. 

Section 4800.2's applicability is questioned concerning payments for improvements made post-separation, indicating the need for legislative clarification. Code of Civil Procedure section 632 outlines the requirements for a statement of decision, which must be issued upon request within specific time frames after a tentative decision is announced, detailing the factual and legal basis for the trial court's ruling on contested issues.