Mcle Self-study Article: Demystifying Marriage of Bonvino: What it Holds and What it Means

• Publication year: 2016
• Author: Dawn Gray

MCLE SELF-STUDY ARTICLE: Demystifying Marriage of Bonvino: What it Holds and What it Means

Dawn Gray

Dawn Gray has practiced family law for over 32 years. Since 1994, her practice has been dedicated to research and writing projects for family law and civil attorneys. She works with many family law attorneys throughout the state on their cases, doing research, drafting pleadings and appellate briefs. She is a past president of ACFLS and is currently on its Amicus committee, as well as a member of FLEXCOM. She gives frequent presentations and continuing education classes on family law issues. With Steve Wagner, Ms. Gray is also the author of the 10-volume series "Complex Issues in California Family Law." She is a frequent contributor to family law publications throughout the state and a member of the editorial board of the California Family Law Monthly.

(Check the end of this article for information on how to access 1 hour of Legal Specialization in Family Law and 1 hour of general self-study credits.)

On November 20, 2015, the Second District issued Marriage of Bonvino, 241 Cal. App. 4th 1411 (2015). In a partially published opinion, the panel reversed the judgment of the Los Angeles County trial court. The decision has generated a lot of controversy as to whether it was correctly decided and what it means. It is also a fairly confusing opinion, weaving together threads of various presumptions, statutes and lines of cases in a way that is not extremely straightforward. In order to understand its holding, it is necessary to pull these various threads apart, see where they came from, and how they interacted to produce the Bonvino result. In this article, I will attempt to do just that.

Just the facts. First, let's take a close look at the Bonvino facts. Back in the early 1990s, Frank Bonvino worked as a sales representative for a company that sells medical products. Although he had a real estate broker's license, he never worked selling real estate. He bought a house in Long Beach and paid off the mortgage. He also owned a duplex with his brother. Dawnel Bonvino worked as a medical supplies sales representative for another company when the parties married on October 2, 1993. Frank stopped contributing to his retirement plans as of that date, "in order to keep his accumulated earnings in those plans as his separate property." Dawnel, for her part, "believed that everything husband owned prior to marriage was owned jointly after marriage." The opinion doesn't say where she got that idea.

After they married, Dawnel moved into Frank's Long Beach house. When Frank changed jobs in 1994, his prior employer distributed his retirement funds to him and he put them in a Schwab account. He never put any other funds into the account during the marriage, so the entire balance in the account was his separate property. The parties' son was born in 1996, and Dawnel stopped working. The parties decided to move closer to Frank's job, and found a house they liked in Westlake Village. Before they bought it, they discussed renting the Long Beach house to Frank's friend, and they also discussed selling it to pay off the Westlake Village mortgage. Frank rented the house to his friend for a year.

The Westlake Village house's purchase price was $410,000. Frank used his separate property funds in the Schwab account to make the down payment of $90,212.50, and Dawnel was aware of this. He also applied for a loan for $328,000, "which included $319,787.50 for the remainder of the purchase price and $8,212.50 for the loan's closing costs and prepaid items."

Frank alone applied for the loan; remember, Dawnel was not working. "The loan application stated the title to the Westlake Village property would be held in the name of Frank Bonvino, as 'married sole and separate.'" On the application, he listed his gross monthly income, his net rental income of $1,280, and his employment car allowance. "His liquid assets were stated as $12,000 in cash held by Michael Thomas Escrow, two accounts at Schwab valued at $80,000 and $110,000 respectively, and a 401k plan valued at $4,521. He also listed real estate valued at $325,000, and another asset valued at $50,000. The total value of liquid and nonliquid assets was $587,621." Dawnel did not sign any of the loan or escrow documents.

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On November 14, 1996, the parties went to a notary so that Dawnel could sign a quitclaim deed to the property. Frank had apparently told her that she had bad credit "and needed to sign the quitclaim deed for them to purchase the house." He "assured" her "that he would put her name on the title as soon as they closed escrow," which occurred on December 11, 1996. He took title as "FRANK A. BONVINO, a Married Man, as his sole and separate property." The parties discussed several times that Dawnel's name was not on the title "and their intent to change title." The parties made payments on the house with community funds. When Frank sold the Long Beach house fifteen months later, the escrow company sent the net sale proceeds "directly to the bank to retire the loan on the Westlake Village property," and the parties made no more mortgage payments. So, other than the mortgage, the funds that the parties used to acquire the house were Husband's separate property and the only community funds used were the fifteen months of mortgage payments.

The Arguments at Trial. Dawnel filed a dissolution petition on September 17, 2005. A year later, they stipulated to bifurcate the issue of the character of the Westlake Village house. Dawnel argued that it was presumed to be community property under Family Code section 760, the general community property presumption, and that the presumption was not rebutted because the mortgage loan proceeds were also presumed to be community property. She argued that "(t)he lender must have intended to rely on husband's community property income for repayment, because husband's employment income was listed on the loan application, and the other source of income listed was less than the amount of the mortgage payment." She also argued that the quitclaim deed she signed should be set aside "as the product of undue influence."

Frank argued the house was entirely his separate property, subject only to a community Moore/Marsden interest. He had made the downpayment entirely from his separate property and paid the mortgage off with separate property and Wife had signed a quitclaim deed at the time he purchased it. As to the undue influence argument, he asserted that any advantage he obtained "was trivial because the community's interest was negligible."

The Trial Court's Decision. Noting "that husband owned substantial separate property," the trial court found in its statement of decision that:

• The Westlake Village property was purchased as the family's home;
• The downpayment of $89,000 came from Frank's separate property;
• At the time of closing, a deed of trust in the amount of $328,000 was taken out based on Frank's employment income of $6,667, net rental income of $1,280, and other income of $650, for a total income of $8,597;
• When the Long Beach property was sold fifteen months later, the proceeds were Frank's separate property;
• Frank used the separate property funds to retire the loan on the Westlake Village property;
• The Westlake Village property was presumed to be community property because it was acquired during marriage;
• Dawnel testified that Frank promised that the property would be held jointly as community property and that he would put her name on the title;
• Dawnel understood he was investing his separate property in the residence and the investment would remain separate;
• Dawnel "denied any agreement that the home would be his separate property with no community interest;"
• Dawnel's testimony concerning the quitclaim deed was more credible and the presumption of undue influence had not been rebutted;
• Frank's explanation to Dawnel "that the quitclaim deed was a means to keep his separate property separate was inadequate, because the law presumed the house was community property and provided for reimbursement of his separate property contribution to the purchase of the marital home under section 2640. Knowledge of this law was imputed to husband as a real estate broker, and he failed to meet his obligation to explain it to wife."
• Frank had not demonstrated the highest good faith and fair dealing as to Dawnel with regard to the quitclaim deed;

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• Frank failed to meet his burden to rebut the presumption the Westlake Village home was community property; and
• Frank had a claim under Family Code section 2640 for reimbursement of his separate property contributions to the purchase of the property.

Based on these holdings, the trial court awarded Frank reimbursement of $411,213.86 under Family Code section 2640 for the downpayment and loan payoff from his separate property. It also found that the property's fair rental value was $3,400 per month from November 1, 2005, to the present and ordered him to pay the community $268,000 for his post-separation use of the property.

The trial court thus held that the property was a community asset even though Frank used only separate property to make the down payment, took title in his name alone and used his separate property to retire the mortgage. Essentially, it held that the community was entitled to all appreciation in its value and Frank was entitled only to reimbursement. Frank...