What's Mine Is Mine, What's Ours Is Ours, and What's Yours Is Ours: the Extension of Watts Charges to Separate Property
| Publication year | 2020 |
| Author | Chandra Moss, CFLS |
Chandra Moss, CFLS
Chandra L. Moss is a Senior Trial Attorney with Holstrom, Block & Parke, APLC and has practiced law since 1991. In 2005, Ms. Moss was designated as a Certified Family Law Specialist by the State Bar of California Board of Legal Specialization. She authored several articles on various family law issues and has interviewed with Fox News concerning governmental child support actions. Ms. Moss is also a vocal and instrumental musician (piano, organ, and violin), volunteers as Board President of a 501(c)(3) nonprofit corporation and is an award winning published fiction writer. She currently serves as the Inland Empire Standing Committee Chair for the Family Law Executive Committee (FLEXCOM).
In what the Fourth District Court of Appeal deemed "a matter of first impression," it held that Watts charges may be levied against a party for living in his/her separate property where the community has partial interest due to the Moore/Mardsen rule. This was the opinion in In re Marriage of Mohler.1
As most family law practitioners already know, the Moore/Marsden rule, stripped to its basics, is that the community acquires a pro tanto interest in separate property when community funds are used to acquire an equity. Where community property funds are used to make payments on an asset purchased by a party prior to marriage, the community obtains an interest in that property in the ratio that the payments against the purchase price with community funds bear to the payments made with separate funds.2 The law concerning how the community acquires equity has expanded to include improvements to the extent that they add value,3 and refinancing of mortgages.4 One way to look at Moore/Marsden is that the community deserves a return on its investment.
Reimbursement to the community for the value of a party's exclusive use of community assets are commonly called Watts charges. In In re Marriage of Watts,5 husband had post separation use of both the family residence (titled in the community) and his community property medical practice. Wife asked the trial court to reimburse the community for the reasonable value of such exclusive use. The trial court concluded it did not have the authority to require husband to do so.6
The appellate court reversed. In so reasoning, it cited In re Marriage of Tucker7 that held the community was entitled to reimbursement for the value of the exclusive use of a refrigerator, and In re Marriage of Johnson8 that held the community was entitled to reimbursement for post-separation receipts from husband's use of the community property commercial fishing boat.9
Watts charges are discretionary. In other words, the court's determination whether to impose these charges "should be made after taking into account all the circumstances under which exclusive possession was ordered."10
When they married, Jodie and Greg Mohler moved into Greg's11 separate property residence where they lived until they separated in 2011. Greg remained in the property post-separation, making the mortgage payments from his separate property for the six years in between separation and trial.12 They agreed that the application of Moore/Marsden gave the community a 33.66% interest in the property through separation. Jodie asked the trial court to find that the community's interest increased post separation through Greg's post-separation payments. The trial court did so, increasing the community's interest to 64.9%.13
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Upon appeal, the appellate court held the trial court committed error, noting that Moore/Marsden applies "only insofar as community funds are used to build equity in an asset, a situation which often terminates . . . upon separation." The ability of the community to acquire additional interest allocation stopped upon separation.14 The court could have left it at...
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