Marriage of Flugger CA1/5 filed 6/22/26

Filed 6/22/26 Marriage of Flugger CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

In re the Marriage of NESSIA and JARRETT FLUGGER.

NESSIA FLUGGER,
Respondent,
v.
JARRETT FLUGGER,
Appellant.

A171524

(Sonoma County
Super. Ct. No. SFL089433)
Jarrett Flugger, husband, appeals from a dissolution judgment. Hecontests the trial court’s denial of reimbursement for (1) his separate property funds deposited into certain retirement accounts, (2) his contribution of separate property funds toward the down payment on the family home, and (3) his payment of a community debt with separate property. Husband also asserts the trial court erred in failing to consider his tax liability for early withdrawals from a retirement account when it ordered him to pay Nessia Flugger, wife, one-half of the account balance. We find the trial court erred in part, and we remand with directions.
FACTUAL AND PROCEDURAL BACKGROUND
Husband and wife married on August 30, 2003. They separated on August 15, 2021, and wife filed a petition for dissolution of marriage on September 29, 2021. The parties settled certain issues before trial and proceeded to trial on division of assets, spousal support, and custody and a parenting plan for their 15-year-old son. Following a 13-day bench trial, the trial court issued a statement of decision, and both parties filed objections to certain findings. The trial court then filed a first amended statement of decision, which determined the division of assets, including the family home. Thereafter, the parties stipulated to modification of the first amended statement of decision as to the sale of the home. The stipulation permitted wife to purchase husband’s community interest in the home. On August 7, 2024, the trial court entered judgment, which attached the first amended statement of decision.
We summarize the trial court’s determinations that are at issue on appeal. The trial court found that the Edward Jones individual retirement account (IRA) numbers 2910 and 8670 wereopened with husband’s separate property but he intended, and did, use the money in the accounts for the benefit of the community. Therefore, each account was“transmuted into a community property account.” Husband was ordered to pay one-half of each account’s balance to wife, totaling approximately $22,000.
Regarding the family home, the trial court found it was community property even though only wife and her mother were on the original title. However, the home was purchased during the marriage. Wife and her mother secured a loan to purchase the home. Husband had poor credit, but he contributed a down payment for the home from his separate property. The trial court found husband“intended to transmute his separate property into a community property gift” and is not entitled to a separate property “ ‘credit’ ” of $55,000. Wife and husband each had a one-half interest in the home.
The trial court found that husband’s $50,000 debt to Winnie Flugger for a loan used for his business’s debts and operating costs was husband’s separate debt. The trial court credited wife’s testimony that she did not consent to the loan and was rarely included in the business’s daily operation.
The trial court found that the Edward Jones IRA number 4977 was community property. Husband was ordered to pay wife one-half of the $125,124.99 account balance, or $62,562.50, out of his share of the house sale proceeds.
DISCUSSION
Legal Principles
“Family Code section 760 states the basic presumption that, except as otherwise provided by statute, all property acquired by a married person during marriage, while domiciled in California, is community property. Each spouse has a ‘present, existing, and equal’ interest in the community property. (§ 751.) On the other hand, property acquired before marriage, or after separation, or at any time by gift, bequest, devise, or descent, is separate property. (§§ 770, subd. (a), 771.)” (In re Marriage of Ciprari(2019) 32 Cal.App.5th 83, 91, fn. omitted (Ciprari).) A spouse may rebut the community property presumption by tracing the source of funds used to acquire property during the marriage to separate property. (In re Brace (2020) 9 Cal.5th903, 914; Fam. Code, § 2640.) “[M]ere commingling of separate property and community property funds does not alter the status of the respective property interests, provided that the components of the commingled mass can be adequately traced to their separate property and community property sources. [Citation.] But if the separate property and community property interests have been commingled in such a manner that the respective contributions cannot be traced and identified, the entire commingled fund will be deemed community property pursuant to the general community property presumption of section 760.” (In re Marriage of Braud (1996) 45 Cal.App.4th 797, 822–823.)
We review the trial court’s determination of whether a particular item is separate or community property under the substantial evidence standard. (In re Marriage of Lafkas (2015) 237 Cal.App.4th 921, 931–932.) “ ‘Ingeneral, in reviewing a judgment based upon a statement of decision following a bench trial, “any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision.” ’ ” (Ciprari, supra, 32 Cal.App.5th at p. 94.) We consider all evidence in the light most favorable to the prevailing party, resolve conflicts in support of the trial court’s findings, and do not reweigh the evidence or reassess witness credibility. (Ibid.) “ ‘The substantial evidence standard applies to both express and implied findings of fact made by the superior court in its statement of decision rendered after a nonjury trial.’ ” (Ibid.) However, a party may avoid implied findings in favor of a judgment and preserve perceived error in a statement of decision by filing objections to the statement of decision. (Ibid.) Here, after the trial court issued its statement of decision, husband filed objections to certain findings.
Edward Jones Account Numbers 2910 and 8670
Husband contends the trial court erred in denying him reimbursement for his contribution of separate property funds to account numbers 2910 and 8670. The trial court’s amended statement of decision statesthat in 2015, husband received a $250,000 gift from his father and a $55,000 inheritance from his mother’s estate. Husband took the majority of these funds and opened account number 2910. Although the statement of decision does not specifically state that father’s gift and inheritance funds were also used to open account number 8670, the trial court found that each account was “set up with Husband’s separate property. However, Husband and Wife’s testimony showed this money was intended and was used for the benefit of the community therefore transmuting these funds into community property.”The balance of account number 2910 as of November 27, 2023, was $14,505.35, and the balance of account number 8670 was $30,730.73. The parties were ordered to split the balancesin both accounts.
Husband contends the trial court erred in finding that his separate property funds in both accounts were transmuted into community property because the trial court failed to apply section 852, which specifies the requirements for a valid transmutation, and because there is no evidence to support such a transmutation. Married persons may agree to transmute separate property to community property. (§ 850, subd. (b).) However, section 852, subdivision (a) states: “A transmutation of real or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.”
The trial court found that husband’s separate property was used to fund both accounts. It then found that because the accounts were used for community expenses, they were transmuted into community property. The trial court erred in finding a transmutation based on testimony that separate property was used for community expenses. “An ‘ “express declaration” ’ is a writing signed by the adversely affected spouse ‘which expressly states that the characterization or ownership of the property is being changed.’ ” (In re Marriage of Lafkas, supra, 237 Cal.App.4th at p. 938.) “ ‘The express declaration must unambiguously indicate a change in character or ownership of property. [Citation.] A party does not “slip into a transmutation by accident.” [Citation.]’ ” (Ibid.) A written instruction to “transfer” stock to one spouse’s name is not sufficient to clearly demonstrate a change in the ownership or characterization of the property under the requirements of section 852. (In re Marriage of Barneson (1999) 69 Cal.App.4th 583, 591–592.) Neither party cites any evidence of an express written declaration stating that husband was changing the characterization or ownership of the accounts at issue. The trial court erred in finding the accounts were transmuted into community property in absence of evidence of an express written declaration stating that the characterization of the accounts was being changed. (In re Marriage of Lafkas, supra, 237 Cal.App.4th at pp. 938–940.)
Wife does not defend the trial court’s finding that the accounts were transmuted into community property. Instead, she argues the trial court’s denial of husband’s claim should be affirmed because insufficient evidence supports tracing of his separate funds. However, wife has not cross-appealed and therefore may not challenge the trial court’s findings.(Kardly v. State Farm Mut. Auto Ins. Co. (1995) 31 Cal.App.4th 1746, 1749–1749, fn. 1.) Husband testified that he opened the accounts with his gift funds, and the trial court’s finding that the accounts were opened with husband’s separate property appears to have credited that testimony. (In re Marriage of Fickle(2013) 217 Cal.App.4th 10, 25–27.)
Wife’s alternative arguments are without merit. She claims that because the balance of account 2910 at the time of judgment was zero, husband’s claim for reimbursement should be denied. However, husband’s appeal contests the trial court’s order that he pay wifeone-half of the account’s value as of November 27, 2023, before husband withdrew the balance. Next, she argues that husband failed to establish the value of the deposits at the time they were made and argues husband is not entitled to any interest on any separate property contribution. However, husband is not claiming any interest on his separate property. In the trial court, husband asked to be awarded 100 percent of the remaining balances of both accounts. He challenges the trial court’s determination that his separate property accounts were transmuted into community property and therefore should be equally divided. Finally, wife argues that husband invited error and therefore cannot claim the trial court erred in denying him reimbursement for the amount in the accounts. Her support for this contention is husband’s trial testimony that he was not seeking to be reimbursed for amounts taken from the accounts and used for community expenses. Again, wife appears to misunderstand husband’s testimony and what he seeks with respect to the accounts. Consistent with his trial testimony, husband did not claim in his objections to the trial court’s statement of decision that he was entitled to reimbursement for the amounts withdrawn from the accounts to pay for community expenses. He acknowledged that “[t]he balance at the time of separation in both accounts is less than the $175,000 Husband contributed from his separate property,” and he only sought to be awarded “the remaining balances in both accounts at the time of separation . . . .”
The trial court’s findings that the balances of the Edward Jones account numbers 2910 and 8670 at the time of separation were transmuted into community property are reversed.
Husband’s Contribution to Down Payment for Family Home
Husband contends the trial court erred in failing to reimburse him under section 2640 for his $55,000 separate property contribution to the down payment for the family home.Section 2640, subdivision (b) states: “In the division of the community estate under this division, unless a party has made a written waiver of the right to reimbursement or has signed a writing that has the effect of a waiver, the party shall be reimbursed for the party’s contributions to the acquisition of property of the community estate to the extent the party traces the contributions to a separate property source.” Section 2640 “creates a substantive right of reimbursement that can be relinquished only by an express written waiver by the contributing spouse. [Citation.] ‘In the absence of such a written waiver the donative intent of the contributing spouse does not bar reimbursement. . . .’ ” (In re Marriage of Carpenter (2002) 100 Cal.App.4th 424, 427.)
The trial court found the family home was community property to which husband contributed a down payment from his separate property funds. However, it denied husband reimbursement for the contribution to the down payment because “he intended to transmute his separate property into a community property gift.” Husband contends the denial of reimbursement was error because he did not waive his statutory reimbursement right in writing. We agree.
Husband testified he received inheritance money in September 2008, which he and wife discussed using for a down payment on the home. Inconnection with purchasing the family home, husband executed a gift letter stating he made a gift of $49,000 to wife and her mother to be applied to the purchase of the property. The letter also stated, “No repayment of the gift is expected or implied in the form of cash or by future services of the recipient.” Wife’s loan application referenced a $55,000 “Gift” from husband. At issue is whether the gift letter is a written waiver of the right of the reimbursement or a writing that has the effect of a waiver under section 2640.
In re Marriage of Perkal (1988) 203 Cal.App.3d 1198 involved a similar situation. In Perkal, the husband purchased a home prior to the marriage as his separate property. (Id. at p. 1200.) During the marriage, his wife persuaded him to place the property in both of their names. Husband executed a grant deed that stated, in part, “ ‘For A Gift, [husband] does hereby Grant to [himself] and [wife], husband and wife As Joint Tenants, the real property’ . . . .” (Ibid., italics omitted.) The trial court found the grant deed stating “ ‘For A Gift’ ” did not constitute a written waiver of husband’s right to reimbursement. (Id. at p. 1202.) The appellate court rejected wife’s argument that the gift language was a waiver of husband’s reimbursement right. (Id. at pp. 1202–1203.) It found there was no evidence to support waiver, which requires “ ‘a voluntary act, knowingly done, with sufficient awareness of the relevant circumstances and likely consequences [and] actual or constructive knowledge of the existence of the right to which the person is entitled.’ ” (Id. at p. 1203.)The husband’s undisputed testimony was that he used the phrase “For A Gift” to avoid payment of a documentary transfer tax and reassessment of property taxes. This evidence was insufficient to satisfy the written waiver provisions of former Civil Code section 4800.2.(Perkal, at p. 1203.)
Here, husband testified that at the time he executed the gift letter he did not have any understanding of a separate property reimbursement right in the event of divorce and that he did not seek legal advice regarding his contribution of the down payment. He made the gift “as required for the mortgage . . . .”Wife does not cite to any contrary evidence on these points. She attempts to distinguish Perkal by arguing that here there was a valid transmutation, which she claims does not require an intentional relinquishment of a known right. Her argument is unclear. As we stated ante, a change in character of separate property through transmutation does not defeat a claim for reimbursement under section 2640. (In re Marriage of Walrath, supra, 17 Cal.4th at p. 920.) The reimbursement right is a substantive right that cannot be relinquished unless there is a written waiver. (In re Marriage of Carpenter, supra, 100 Cal.App.4th at p. 427.)
The determination of waiver is generally a factual question that may not be reversed on appeal if it is supported by substantial evidence. (Zamora v. Lehman (2010) 186 Cal.App.4th 1, 12.) Here, the statement of decision does not specifically cite to section 2640 or rule on the question of whether husband waived his reimbursement right. Husband objected to the statement of decision on the grounds that the gift letter did not waive his rights under section 2640 and that he testified he was not aware of his reimbursement right at the time he executed the gift letter. Husband has preserved the issue for review, and we will not imply a finding of waiver. (Ciprari, supra, 32 Cal.App.5th at p. 94.) When the facts are undisputed and there is only one reasonable inference, the determination of whether there was a waiver is as a question of law. (Platt Pacific, Inc. v. Andelson (1993) 6Cal.4th 307, 319.)We follow Perkaland find that the gift letter, which does not mention husband’s statutory right of reimbursement, does not waive his rights under section 2640. There is no evidence husband was aware of this right when he signed the letter, which he testified “was required for the mortgage . . . .” (In re Marriage of Carpenter, supra, 100 Cal.App.4th at p. 428 [“The waiver of a legal right requires an intentional act with knowledge of the right being waived”].) We reverse the trial court’s denial of husband’s claim for reimbursement of his separate property contribution to the family home.
Husband’s Payment of $50,000 Debt
Husband contends the trial court erred in denying him reimbursement for half of a $50,000 business loan he repaid in 2022. In 2015, husband quit his job. In 2016, he started Gan Nahar, Inc., a spice and bacon wholesaler. Husband was the sole employee. The business was not financially successful and incurred substantial debt. Wife expressed to husband that the business should be dissolved. In 2018, Winnie Flugger loaned husband $50,000 and he used the funds to pay Gan Nahar’s operating expenses. On June 29, 2022, after separation, husband paid off the loan using his separate property funds. At trial he claimedthat the loan was a community property debt and that wife should reimburse him $25,000 for her share of the debt. The trial court credited wife’s testimony that she did not consent to borrow the money and found: “During the marriage Husband rarely included Wife in the daily business operation. Both testified this was Husband’s creation. While Wife worked a salary job to support the community, Husband was expending separate property funds on a failing business. The Court, using its equity powers, finds this debt was Husband’s separate property debt. He is not entitled to reimbursement of any monies used to repay the loan.”
Husband’s opening brief provides limited legal analysis. He cites to section 2620, which states: “The debts for which the community estate is liable which are unpaid at the time of trial, or for which the community estate becomes liable after trial, shall be confirmed or divided as provided in this part.” Here, the debt was paid on June 29, 2022. Trial began in July 2023. Husband does not provide analysis of how section 2620 applies under these facts.
Husband also refers to section 2622, subdivision (a), which states, in part, “[D]ebts incurred by either spouse after the date of marriage but before the date of separation shall be divided as set forth in Sections 2550 to 2552, inclusive, and Sections 2601 to 2604, inclusive.” He incorrectly states section 2551 provides that community debts are those incurred after the date of marriage but before the date of separation. In fact, section 2551 states: “For the purposes of division and in confirming or assigning the liabilities of parties for which the community estate is liable, the court shall characterize liabilities as separate or community and confirm or assign them in accordance with Part 6 (commencing with Section 2620).” Husband states, without citation to the record or to legal authority, that it is undisputed Gan Nahar, Inc., was characterized by the trial court as a “ ‘family business’ ” and therefore its debts are equally community property assets. He then concludes, again without citation to any authority, “Where a community liability is paid by one of the parties using separate property funds, that party is entitled to reimbursement.”
Husband has failed to affirmatively demonstrate error through reasoned argument and discussion of legal authority. (Cryoport Systems v. CNA Ins. Cos. (2007) 149 Cal.App.4th 627, 633 [“Simply hinting at an argument and leaving it to the appellate court to develop it is not adequate”]; Hodjat v. State Farm Mutual Automobile Ins. Co. (2012) 211 Cal.App.4th 1, 10 [“an appellant is required to not only cite to valid legal authority, but also explain how it applies in his case”].) The trial court’s denial of husband’s claim for reimbursement of one-half of the $50,000 debt is affirmed.
Edward Jones IRA 4977
The trial court found the parties’ Edward Jones IRA number4977 to be community property with a postseparation balance of $125,124.99. It ordered husband to pay wife $62,562.50 out of his share of the house sale proceeds. Husband contends the trial court erred by failing to consider the tax liability associated with withdrawing funds from the account.
As an initial matter, we note the trial court’s decision does not require husband to withdraw funds from the account. However, husband states it was undisputed that he withdrew the balance from the account “before trial.” He provides no record citation; nor does he state when he made the withdrawal. (Cal. Rules of Court, rule 8.204(a)(1)(C).) Husband claims he demonstrated “at trial” that he incurred tax liability for the early withdrawal of funds from the account. However, his record citation is to his objections to the statement of decision. Notably, his objections to the statement of decision also do not refer to any trial testimony but conclude that “33.3% is the immediate and certain tax Husband must pay . . . .” He supports his tax figures with unverified attachments that appear to be from Web sites of the Franchise Tax Board and the Internal Revenue Service regarding general tax rate schedules and the tax implications for early withdrawals from retirement plans. There is no indication that any of this information was presented at trial.
Husband provides citations to case law holding that the trial court shall consider tax consequences emanating from a division of community assets “so long as there is a sufficient showing of immediate and specific tax liability.” However, the majority of thecited cases referencetestimony or declarations submitted to the trial court regarding the tax consequences. (See In re Marriage of Fonstein (1976) 17 Cal.3d 738, 749, fn. 5 [expert accountant testimony]; In re Marriage of Harrington (1992) 6 Cal.App.4th 1847, 1849 [declaration of family accountant]; In re Marriage of Sharp (1983) 143 Cal.App.3d 714, 717 [tax expert].) In re Marriage of Davies (1983)143 Cal.App.3d 851 does not specifically discuss the evidence presented at trial but states the requirement of “a showing of ‘immediate and specific’ tax liability . . . .” (Id. at p. 857, italics omitted.)None of the cited cases involve the situation here, in which husband relies only on posttrial submissions purportedly demonstrating “immediate and specific tax liability” based on what appear to be unverified attachments from Web sites.
Wife’s response brief cites to husband’s trial testimony stating that he spent money from “my IRA account” for his legal fees and that wife did not approve his withdrawals. Wife argues that because husband’s withdrawal from account number 4977 was after separation, without wife’s approval, and benefitted husband alone, any tax liability is not a debt for which the community estate is liable. She relies upon section 910, which states the community is liable for debts incurred during marriage and defines “ ‘[d]uring marriage’ ” as excluding “the period after the date of separation . . . and before a judgment of dissolution of marriage or legal separation of the parties.” Husband’s reply brief does not contest the factual record cited by wife or offer any contrary evidence that his withdrawal from account 4977 was prior to separation. Nor does he address wife’s argument that the community is not responsible for any tax liability incurred based on husband’s postseparation action of withdrawing funds from account 4977 without wife’s approval and for his own use.
Husband has failed to affirmatively demonstrate error. His posttrial submission of objections to a tentative decision that provides unverified attachments from state and federal tax agency Web sites is not sufficient to demonstrate “immediate and specific tax liability” of the community estate. The trial court’s ruling that husband shall pay wife one-half of the balance of account number 4977 is affirmed.
DISPOSITION
The judgment is reversed as to the trial court’s findings that Edward Jones account numbers 2910 and 8670 were transmuted into community property and that husband is not entitled to reimbursement of his separate property contribution to the down payment for the purchase of the family home. The matter is remanded for the trial court to enter a new judgment characterizing the balance in the Edward Jones account numbers 2910 and 8670 as husband’s separate property, and to award husband section 2640 reimbursement for his separate property contribution to the down payment of the family home consistent with this opinion. In all other respects, the judgment is affirmed. The parties shall bear their own costs on appeal.

Jackson, P. J.

WE CONCUR:

Simons, J.
Burns, J.

A171524/Flugger v. Flugger