Jones v. Steinberger
111 Cal. Rptr. 2d 521, 2001 Daily Journal DAR 9571, 91 Cal. App. 4th 1449 (2001)
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Rule of Law:
Under California Family Code § 852, a gift of jewelry between spouses that is substantial in value, considering the circumstances of the marriage, does not transmute from community property to the recipient's separate property unless there is a valid written express declaration to that effect.
Facts:
- Buff Jones and James Mark Steinberger married on April 30, 1988.
- On March 1, 1993, during the marriage, Buff Jones began working for Compuware under an employment agreement.
- Approximately five years into the marriage, the couple used community funds to purchase a loose diamond.
- James Steinberger had the diamond set in a woman's ring and presented it to Buff Jones after their fifth anniversary with a congratulatory card.
- The parties separated on June 14, 1997.
- On November 10, 1997, after the separation, Compuware terminated Buff Jones's employment.
- Buff Jones negotiated a new severance agreement with Compuware, receiving one year of salary and continued vesting of stock options.
- In exchange for the severance package, Buff Jones signed a release of legal claims against Compuware and agreed not to work for two specific competitors for three years.
Procedural Posture:
- Buff Jones (wife) initiated a marital dissolution action against James Mark Steinberger (husband) in the trial court.
- The parties resolved some financial issues through a stipulated judgment, but disputes over severance pay, stock options, and a diamond ring proceeded to a court trial.
- The trial court ruled that the severance pay and stock options were Buff's separate property.
- The trial court also found that the diamond ring, though substantial in value, was a gift to Buff and therefore her separate property.
- James Mark Steinberger, as appellant, appealed the trial court's judgment on these three issues to the intermediate court of appeal; Buff Jones is the appellee.
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Issue:
Does a gift of jewelry, purchased with community funds and found to be substantial in value considering the circumstances of the marriage, transmute into the recipient spouse's separate property without a written express declaration as required by California Family Code § 852?
Opinions:
Majority - Cottle, P. J.
No. A gift of jewelry that is substantial in value does not transmute into separate property without the written declaration required by statute. First, the court affirmed the trial court's finding that the wife's severance pay and post-termination stock option vesting were her separate property. Substantial evidence supported the conclusion that she was about to be terminated 'for cause,' a situation where her employment contract provided no severance benefits. Therefore, the severance package was not derived from a right earned during the marriage but was a 'new deal' negotiated post-separation in exchange for new consideration: her waiver of potential legal claims and a non-compete agreement. Second, regarding the diamond ring, the court reversed the trial court. Family Code § 852 requires a written 'express declaration' for a transmutation of property to be valid. While § 852(c) creates an exception for gifts of jewelry, this exception explicitly does not apply if the gift is 'substantial in value taking into account the circumstances of the marriage.' Because the trial court found the ring was substantial in value and the accompanying card did not meet the 'express declaration' standard, the statutory writing requirement was not met, and the ring remains community property.
Analysis:
This decision reinforces the bright-line rule established by California Family Code § 852, prioritizing strict statutory formalities for interspousal property transmutations over evidence of donative intent, particularly for valuable assets. By holding that the 'substantial value' limitation on the jewelry gift exception is absolute, the court underscores a legislative policy aimed at reducing litigation and potential perjury in dissolution proceedings. The ruling also clarifies the analysis for post-separation employment benefits, distinguishing between deferred compensation earned during marriage (community property) and benefits negotiated post-separation in exchange for new considerations, such as waiving legal claims (separate property). This provides a crucial framework for characterizing severance packages in community property states.
