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In re Marriage of Olson27 Cal. Supreme Court of California. July 3, Opinion by Richardson, J. We consider the duties of a trial court in a dissolution proceeding when property is lost to the community during the period between the announcement of an intended decision and the entry of an interlocutory decree.
The parties accumulated substantial community assets during their marriage, including a family residence and interests in several business enterprises. They also incurred sizable community obligations in the form of corporate debts and business related expenses. These obligations included notes secured by first, second, and third deeds of trust on the family residence. On August 23,following an order to show cause hearing, wife was awarded the interim exclusive occupancy and use of the family residence, including the household furniture, furnishings, and appliances therein.
She was ordered to make the payments on the note secured by the first trust deed on the home and husband was ordered to make the payments on the note secured by the second trust deed. Both parties were restrained from disposing of any community property except in the ordinary course of business. The parties effected a temporary reconciliation but thereafter separated permanently.
Further alleging that husband had failed to comply with the court's earlier order that he make payments on the North County Bank note, wife requested that the court order a sale of some of the community assets in order Married 420 27 north 27 meet the obligations then owing on the family residence.
An order to show cause in re contempt thereupon issued. On January 17,husband filed a counterdeclaration in opposition to the requested sale of certain of the community real property.
He averred that the property which wife proposed be sold to discharge North County Bank's debt was the only substantial income property held by husband and that he had obtained refinancing of several of the community obligations, thus generating funds which would be available within 60 days to prevent the threatened foreclosure of the residence. He further alleged that the requisite notice of default on the North County Bank's indebtedness had not been recorded.
A five-day trial, limited to the issue of an appropriate division of community property, was held on May and May, in the Superior Court of the County of San Diego. The parties introduced considerable evidence, both oral and documentary, as to the extent and nature of the community assets and debts, and the matter was submitted to the trial court for its decision. The trial court promptly issued its "Decision on Submitted Matter" on May 23,providing, inter alia:.
This property is awarded to petitioner who shall hold respondent harmless as to all encumbrances thereon. On June 14,wife moved to reopen proceedings for the purpose of establishing that a on June 8,the family residence, which had tentatively been awarded to her by the court, had been sold at a nonjudicial foreclosure sale by the trustee under the North County Bank deed of trust, and that after receipt of a three-day notice to quit wife had vacated the residence, and b neither of the parties would receive any proceeds from the sale.
Wife urged that an appropriate finding to the effect that the residence no longer constituted a community asset was both necessary and relevant to any order which purported to direct an equal division of the community property. She further argued that her failure to introduce this evidence ly was excusable because the trial of the cause had Married 420 27 north 27 the trustee's sale. A hearing on wife's motion to reopen was held on September 20,at which husband contended that wife had deliberately permitted the foreclosure to proceed while at all times she had had both the means and the opportunity to save the property.
Wife countered by asserting that she lacked sufficient income to pay the mortgage payments, and the taxes, insurance, and other expenses that refinancing would have entailed, and that this was the reason that she had not tried to refinance the property. That's the issue that I think I have to face. Gann [counsel for wife]: Reopen for a limited purpose, Your Honor, showing the sale of property. Renshaw doesn't say it didn't happen.
I accept the fact that it happened. Who is going to carry the burden of what happened, the judge or the parties? That's the decision this judge has to make. None of us can tell at the instant of decision that it's, quote, correct, unquote.
Decisions are made based upon factors available to the parties at the time they must be made. This is not only a fact of life, it is a fact of legal life, it's a fact of the courtroom. That's one that I'll probably fall on, but it's a decision that's made by the judge having in mind after having read the factors, the points and authorities, the arguments, the declarations that are on file.
As I said at the outset that was a vital factor to this court. Although having [27 Cal. It just puts to the court: Okay, Judge, here is what our situation is, this is what happened, what are you going to do about it? The judge is going to say: Let the chips fall where they did, motion is denied. The interlocutory judgment of dissolution of marriage was ed and filed the next day, September 21, The findings of fact and conclusions of law filed with the interlocutory decree were generally in accord with the "Decision on Submitted Matter" issued on May 23,the findings of fact stating, in part, as follows:.
That the community property of the parties consists of the following assets, with the following net equity values ascribed to each such asset. That the property subject to disposition by the court in this proceeding should be awarded as follows:. Wife appeals from that portion of the interlocutory judgment of dissolution of marriage which divided the community property.
The controlling statutory language appears in section of the Civil Code which, in relevant part, provides:. For purposes of making such division, the court shall value the assets and liabilities as near as practicable to the time of trial, Superior Court Cal. None of the circumstances described in subdivision b as authorizing Married 420 27 north 27 unequal division of property is applicable in the case before us. We note, further, that the trial court's "Decision on Submitted Matter" constituted an announcement of its intended decision. It did not thereafter restrict the court's reconsideration of its proposed division of the community property prior to entry of its interlocutory decree.
Referring to a notice of intended decision, a respected commentator has observed: "This announcement is preliminary and tentative: it 'shall not constitute a judgment and shall not be binding [27 Cal. Procedure 2d ed. Rules of Court, rule a. Stoumen v. Munro Cal. Lyons Cal. Hacker Cal. Rosso 87 Cal. Here, the court failed to do either, acknowledging that while it could reopen the hearing it would not do so. Under these circumstances we conclude that it was an abuse of discretion to decline to reopen the trial for purposes of making a more current and accurate determination of the community assets and debts.
It should be noted that sectionsubdivision arequires only that "the court shall value the assets and liabilities as near as practicable to the time of trial. Rather than attempting to impose a rigid formula on the courts, the Legislature has recognized that there may be situations in which both the nature and value of community property cannot be fixed or ascertained at the precise time of trial. Under these circumstances trial courts are thus permitted a reasonable degree of flexibility in accomplishing substantial justice.
In the instant case, a foreclosure and forfeiture of a substantial community asset occurred after trial but before entry of the interlocutory decree. The trial proceedings should have been reopened for the purpose of recalculating the community property valuations and indebtedness under the mandate of Civil Code section An asment to wife in September of of a family residence which had been lost to the community in June of produced a consequence which was neither fair in principle, nor equal in result.
The judgment is reversed insofar as it purports to dispose of the community property of the parties, and the cause is remanded to the trial court for further proceedings consistent with our opinion. Citation 27 Cal. Warren Beall for Respondent. The findings of fact and conclusions of law filed with the interlocutory decree were generally in accord with the "Decision on Submitted Matter" issued on May 23,the findings of fact stating, in part, as follows: " Bird, C.Married 420 27 north 27
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In re Marriage of Olson