Grappo v. Coventry Financial Corporation

235 Cal. App. 3d 496 (1991)

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Nature of the Case

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Facts

H and W were married in 1974 and separated in 1979. H had retired from his 25-year career as an agent of the Internal Revenue Service. He was an active real estate investor. H actively managed a large number of real estate investments. H received income in the form of rents from 25 parcels of real estate which he owned in his own name. H was also an attorney, an accountant, and a licensed real estate broker. In 1977, W acquired three unimproved lots in Incline Village, Nevada of which one was the property at issue. W acquired this property in her own name, as her separate property, with funds obtained by her through a bank loan. Since the beginning of the marriage, they had kept their property segregated. All property acquired by either of them during their marriage was to remain the separate property of the person acquiring it. They had 'an explicit understanding' that any incremental increase in value to each party's separate property attributable to their personal time and effort spent managing and supervising such property would also be separate property and not community property. After separation, W began the construction of a house on the property. H actively discouraged H from obtaining the money from a relative and instead provided the construction funding himself. W executed a promissory note secured by a deed of trust on some of her separate property in Alameda, California and for a second loan execute a 'receipt' to repay. H continued to provide money but without any formal documentation. W eventually defaulted and H got involved claiming a community property interest in the property. The court ruled against H and H appealed; the court was wrong to apply California law and not Nevada to determine H’s interest in the property. H appealed.