Court of Appeal:
Sale of Property for $1 Cannot Be Deemed a ‘Contribution’
Opinion Says That in Divvying Up Assets in Divorce, Husband Was Not Entitled to Credit in Amount of True Value of Separate Property He Transferred to Community-Owned Business for Nominal Amount
By a MetNews Staff Writer
A marital partner’s sale of separate property to the community for a miniscule amount does not constitute a “contribution” which must be credited to that party in dividing assets in a dissolution of marriage proceeding, Div. Four of the First District Court of Appeal has held.
Appellant Dale Motiska and respondent Caroline Ford were wed in 2001. In 2002, in post-divorce proceedings with his previous spouse, Motiska was awarded Neon Palm Nursery as his separate property.
He then sold Neon Palm to Buxup Corporation, owned by himself and Ford, for $1. In the dissolution of marriage proceeding between Motiska and Ford, the husband maintained that he was entitled to a credit for his contribution to the community in the amount of the true value of Neon Palm.
Motiska cited Family Code §2640 which provides:
“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 property estate to the extent the party traces the contributions to a separate property source.”
Solano Superior Court Judge Dora M. Rios ruled that Motiska made no contribution, explaining:
“[T]o me, Neon Palm was sold. It was a sale. It was a sale….He set the value himself. There was no undue influence. There was no interference by Miss Ford. He set the value at a dollar. He sold it for a dollar. He received the dollar. It is a sale. It is done.”
In an opinion filed Wednesday, Justice Jon B. Streeter expressed agreement with Rios. He wrote:
“We publish our opinion resolving this appeal because the principal question raised here—whether a spouse’s sale of property to the marital community for the nominal amount of $1 constitutes a de facto gift, triggering a right to contribution under section 2640—is a matter of first impression. We answer that question no.”
The jurist declared:
“[W]e hold the court correctly ruled Motiska’s sale of Neon Palm to Buxup—at the sale price of $1 set by Motiska—was not a contribution to the acquisition of property of the community estate that would entitle him to reimbursement under section 2640. As a result, there was no need for the court to take additional evidence as to the amount of the purported contribution.
“In our view, a spouse’s sale of property to the community (or, as here, to a business that is a community asset) differs from a freely given contribution that is subject to reimbursement under section 2640….[A] sale of property (i.e., the exchange of property for consideration) is not commonly viewed as a contribution by the seller to the buyer.”
“Even if $1 is often considered a nominal amount, that general observation does not persuade us that the sale price selected by Motiska should be disregarded, or that he should receive additional reimbursement above that price.”
The case is In re Marriage of Motiska and Ford, 2023 S.O.S. 4050.
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