1

Filed 8/14/23 Thompson v. Thompson CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 ONE

RICHARD LEE THOMPSON,

Petitioner and Appellant,

v.

RHONA FOGARTY THOMPSON,

Respondent.

 A164992

 (San Mateo County

 Super. Ct. No. 

19FAM01440)

This is an appeal from an order made after a bifurcated “trial” on two 

questions pertaining to the parties’ premarital agreement (PMA). The first is 

whether the terms of the PMA “preclude the creation of community property 

pursuant to Family Code [s]ection 760 et seq., except as specifically provided 

in paragraphs 3, 4, 5, 6, and 7 of the [PMA].” (Italics omitted.) The second is 

whether the terms of the PMA excuse the parties’ “respective duties to trace 

separate property claims under California community property law.” The 

parties treated, and the trial court considered, these two questions as legal 

ones of contract interpretation.

The court concluded the answer to both questions is “NO.” The court 

was not asked to decide the character of any particular asset (i.e., if it is 

community or separate property), nor did it. Thus, unlike most cases 

concerning the scope and import of a PMA, which resolve concrete disputes 
2

about specific assets, the trial court here was asked two broad questions, to 

which it provided equally broad answers. We affirm.

BACKGROUND1

Rhona Fogarty Thompson, respondent in this divorce proceeding, filed 

a request to bifurcate and set for trial several questions, including questions 

concerning the interpretation of the PMA “as to the creation of community 

property.” She maintained that she and Richard Lee Thompson (Rick),2

petitioner in this proceeding, have “such different interpretations regarding 

the manner in which community property can be created pursuant to that 

agreement that [the two are] unable to move forward towards settlement or 

final judgment.” Rhona phrased the community property question she 

wanted answered as follows: “[D]o the terms of the [PMA] preclude the 

creation of community property pursuant to Family Code [s]ection 760 et 

seq., except as specifically provided in paragraphs 3, 4, 5, 6, and 7 of the 

[PMA].” (Italics omitted.) 

According to Rhona, Rick views the PMA as a waiving all Family Code 

provisions pertaining to community property and thus foreclosing the 

creation of such property “in any way other than those specified in 

paragraphs 3, 4, 5, 6, and 7” of the PMA. She characterized Rick’s view of the 

PMA as establishing a “separate property presumption” which, in turn, 

excuses him from “tracing requirements.” 

To illustrate, Rhona quoted interrogatory answers Richard provided 

wherein he stated, “All assets acquired and investments made during 

1 We provide only a summary of the facts here, and discuss the specific 

facts, including the provisions of the PMA, in connection with our discussion 

of the issues raised on appeal. 

2 We refer to the parties by their first names for clarity. 
3

marriage were made with my and/or Rhona’s premarital assets. As such, the 

sources of capital for all assets acquired and investments made during 

marriage were either my and/or Rhona’s separate property. In addition, per 

paragraph 1 and 2 [of the PMA], all rents, issues, profits and proceeds 

thereof, and all appreciation in the value of such assets and investments 

during marriage are my and/or Rhona’s separate property. While the [PMA] 

creates certain rights of the community to be apportioned. . . , these 

provisions do not change the character of the capital that was used to acquire 

assets and make investments during marriage, which, by definition, were 

separate property per paragraphs 1 and 2.” 

Rhona maintained Rick’s view of the PMA was not supported by its 

provisions and that she and Rick “created community property throughout 

[their] marriage pursuant to both the express language of the PMA and the 

community property law where the [agreement] is silent,” and “[t]o the extent 

Rick has any current separate property assets, he must trace them to his 

premarital or post-separation efforts.” 

Prior to the court hearing, the parties submitted opening trial briefs, 

followed by responding trial briefs. In her briefs, Rhona largely repeated the 

assertions she had previously made in support of bifurcating the community 

property formation question. She asserted there is no “explicit” waiver of 

community property rights in the PMA as required for such waiver and that 

the agreement is beset with “numerous conflicting and ambiguous 

statements.” She further claimed that, “[f]or the most part,” the PMA 

“merely restates well-established Family Code principles and presumptions.” 

In his opening and responding trial briefs, Richard disagreed on all points. 

By the time of briefing, the parties considered there to be two 

community property questions before the court: (1) whether community 
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property could be created in any way other than as specified in paragraphs 3 

to 7 of the PMA, and (2) whether the parties “contract[ed] out of their 

respective duties to trace separate property claims” under the Family Code. 

None of the briefs provided concrete examples, based on property 

actually in dispute, to illustrate the import of the parties’ respective positions 

as to the meaning of the PMA. However, some inkling may be gleaned from 

Rhona’s assertion in her opening trial brief that because there was, according 

to her, no wholesale waiver of community property rights, the “parties were 

free to create community property” through, for example, (1) “[t]aking title to 

property in joint name (Family Code[,] § 2581[3]; Probate Code[,] § 5305),” (2) 

“[i]ncome earned from, and appreciation on, community property,” (3) 

“[f]urther investment of community property,” and (4) “[c]ommingling of 

separate and community property.” 

Rick responded to each point. As to the first, he claimed that because 

the parties had assertedly waived their rights under the community property 

laws, taking title to property jointly did not give rise to any statutory 

presumption that the property is community property. As to the second and 

third points, Rick asserted the PMA “contains no language providing that the 

3 “Family Code section 2581 is a special presumption at divorce that 

‘ “specifically governs real property designated as joint tenancy.” ’ 

[Citations.] Unlike the general community property presumption, the Family 

Code section 2581 presumption cannot be rebutted by tracing; it can only be 

rebutted by (1) a clear statement in the deed or other documentary evidence 

of title that the property is separate property and not community property, or 

(2) proof that the parties have made a written agreement that the property is 

separate property.” (In re Brace (2020) 9 Cal.5th 903, 929.) In other words, 

“ ‘the affirmative act of specifying a form of [joint] ownership in the 

conveyance of title . . . removes such property from the more general 

[community property] presumption’ and places it under the specific 

community property presumption now stated in Family Code section 2581.” 

(Ibid.) 
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rents, issues, profits and proceeds of any community property created 

through [the provisions of the PMA expressly specifying how community 

property can be created] and the appreciation in value of such community 

property occurring during marriage shall be likewise community property.” 

As to the fourth point, Rick acknowledged “there could be comingling of 

community and separate property funds” but this did not establish a 

“presumption that such funds are community” because the parties supposedly 

waived all Family Code provisions, including presumptions. Rather, he 

maintained the PMA effectively established a presumption that “such funds 

are separate property unless the community can prove otherwise.” 

(Underscoring omitted.) 

At the hearing, the parties presented no evidence other than the PMA 

and devoted their time to legal argument on the questions before the court. 

At the close of the hearing, the court ruled from the bench. 

As to the first question, the court found no support in the law, “nor 

clear language in the document itself, that would support” Rick’s “separate 

property presumption” or “[that] the community property created per the 

PMA would not continue to be defined as such under the Family Code,” 

unless “proven not to be separate property.” It found Rick’s “argument that 

the intent of the parties was to use the community property for living 

expenses only to be nonsensical and in direct conflict with the writing itself.” 

The court concluded “the language of the PMA . . . supports [its] 

characterization as a confirmation agreement,” i.e., that the “parties clearly 

intend[ed] to preclude the development of community property in their 

respective separate property owned prior to the commencement of marriage.” 

As to the provisions of the PMA specifying how community property can be 

created, the PMA does not clearly waive community property rights in “any 
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and all subsequent community property created” through those paragraphs. 

“Therefore, the community property created pursuant to the PMA remains 

community property and is subject to California community property law.” 

As to the second question concerning tracing, the court ruled the PMA 

not only “specifically provides” for the commingling of separate and 

community property and tracing in one provision, it is “riddled with the 

possibility of commingling” in other respects. And as to the latter 

potentiality, there is no clear waiver of tracing requirements under the 

Family Code. 

The court subsequently filed a written order setting forth its ruling. 

DISCUSSION

Interpreting Premarital Agreements

California law has historically “recognized the power of parties 

contemplating a marriage to reach an agreement containing terms at 

variance with community property law. Thus in 1850, the Legislature 

provided that community property principles shall govern the rights of the 

parties ‘unless there is a marriage contract, containing stipulations contrary 

thereto.’ (Stats. 1850, ch. 103, § 14, p. 255; see also . . . Barker v. Barker

(1956) 139 Cal.App.2d 206 . . . [‘Parties contemplating marriage may validly 

contract as to their property rights, both as to property then owned by them 

and as to property, including earnings, which may be acquired by them after 

marriage [citations], and the codes provide for such agreements. . . .’]; see also 

Fam. Code, § 1500 [‘The property rights of husband and wife prescribed by 

statute may be altered by a premarital agreement or other marital property 

agreement’].)”4 (In re Marriage of Bonds (2000) 24 Cal.4th 1, 13 (Bonds), 

4 All further statutory citations are to the Family Code unless 

otherwise indicated. 
7

partially superseded by statute on other grounds as stated in In re Marriage 

of Cadwell-Faso and Faso (2011) 191 Cal.App.4th 945, 958.)

A “premarital agreement generally has been considered to be 

enforceable as a contract, although when there is proof of fraud, constructive 

fraud, duress, or undue influence, the contract is not enforceable. [Citations.] 

The rules applicable to the interpretation of contracts have been applied 

generally to premarital agreements.” (Bonds, supra, 24 Cal.4th at p. 13.) 

Parties negotiating a PMA are not presumed to be in a confidential 

relationship that would otherwise give rise to fiduciary duties owed by the 

spouses or to the presumption of undue influence when a transaction benefits 

one of them. “On the contrary, it is evident that the Uniform [Premarital 

Agreement] Act was intended to enhance the enforceability of premarital 

agreements, a goal that would be undermined by presuming the existence of 

a confidential or fiduciary relationship.” (Id. at p. 29.)

“In interpreting a written agreement, we ‘look first to the language of 

the contract . . . to ascertain its plain meaning or the meaning a layperson 

would ordinarily attach to it.’ [Citation.] ‘A contract must be so interpreted

as to give effect to the mutual intention of the parties as it existed at the time 

of contracting, so far as the same is ascertainable and lawful.’ (Civ. Code, 

§ 1636.) The intent is to be inferred, if possible, solely from the written 

provisions of the contract. (Civ. Code, § 1639.) Language in a contract must 

be interpreted as a whole and in the circumstances of the case, and cannot be 

deemed ambiguous in the abstract.” (In re Marriage of Facter (2013) 

212 Cal.App.4th 967, 978 (Facter), italics omitted, superseded by statute on 

other grounds as stated in In re Marriage of Clarke and Akel (2018) 

19 Cal.App.5th 914, 921–922.) “ ‘[I]t is the objective intent, as evidenced by 

the words of the contract, rather than the subjective intent of one of the 
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parties, that controls interpretation.’ [Citation.] The parties’ undisclosed 

intent or understanding is irrelevant to contract interpretation.” (Founding 

Members of the Newport Beach Country Club v. Newport Beach Country Club, 

Inc. (2003) 109 Cal.App.4th 944, 956.)5

A contractual waiver of a statutory right “ ‘must be clearly apparent in 

the contract and its language must be unambiguous and unequivocal, leaving 

no room for doubt as to the intention of the parties.[‘ ” (Badie v. Bank of 

America (1998) 67 Cal.App.4th 779, 804 (Badie).) “Although an effective 

waiver, particularly in a nonadhesive contract, need not expressly state, ‘I 

waive my right to a [statutory entitlement]’ or words to that effect, it must 

clearly and unambiguously show that the party has agreed to” forego such 

entitlement. (Ibid.; accord, In re Marriage of Carpenter (2002) 

100 Cal.App.4th 424, 428–429 (Carpenter) [“ ‘There must be “. . . an actual 

intention to relinquish [a statutory right] or conduct so inconsistent with the 

intent to enforce that right in question as to induce a reasonable belief that it 

has been relinquished.” ’ ” Quoting In re Marriage of Perkal (1988) 

203 Cal.App.3d 1198, 1203].) “Where it is doubtful whether a party has 

waived his or her” statutorily protected rights, “the question should be 

resolved in favor of preserving that right.” (Badie, at p. 804.) In Badie, for 

example, the court concluded there was “no unambiguous and unequivocal 

waiver of the right to a jury trial either in the language of [the bank’s] change 

5 When it is not possible to infer the parties’ intent solely from the 

written provisions of the agreement, which is often the case in disputes over 

the meaning of a PMA, the court may admit extrinsic evidence if it supports a 

meaning to which the language is reasonably susceptible. (In re Marriage of 

Thorne & Raccina (2012) 203 Cal.App.4th 492, 503.) Despite Rhona’s 

assertion in the trial court that the PMA contains “numerous conflicting and 

ambiguous statements,” neither she nor Rick sought to introduce any 

extrinsic evidence.
9

of terms provision or in any other part of the original account agreements.” 

(Id. at p. 805.) In Carpenter, neither the provisions of the PMA nor the 

extrinsic evidence supported finding a waiver of the right to reimbursement. 

(Carpenter, at pp. 428–429.) 

Citing to In re Marriage of Moore (1980) 113 Cal.App.3d 22 (Moore), 

Rhona contends that in determining whether a party has waived his or rights 

to community property, “heightened scrutiny” must be brought to bear and 

the “standard of proof for waiver is clear and convincing evidence.” As 

subsequent cases, including the Bonds case, reflect, Moore dealt with a 

significantly different context, namely a waiver of spousal support in a postmarital property settlement. (Id. at pp. 25–26.) Post-marriage spouses are 

fiduciaries with respect to one another, and therefore a greater degree of 

scrutiny pertains to a waiver of statutory rights. In the context of PMAs, 

however, the parties are not in a fiduciary relationship, and for that reason, 

among others, the Supreme Court in Bonds rejected a heightened “strict 

scrutiny” standard to determine whether a party not represented by counsel 

voluntarily entered into a PMA. (Bonds, supra, 24 Cal.4th at p. 12.) The 

Court of Appeal, in adopting such a standard, had relied on Moore and other 

cases dealing with non-PMA contexts. (In re Marriage of Bonds (1999) 

71 Cal.App.4th 290, 313, reversed in part by In re Marriage of Bonds (2000) 

24 Cal.4th 1, 38.) The high court explained that a “strict scrutiny” standard 

is “inconsistent with Family Code section 1615, which governs the 

enforceability of premarital agreements.” (Bonds, at p. 12.) Indeed, such a 

heightened standard “would have the effect of shifting the burden of proof on 

the question of voluntariness to the party seeking enforcement of the 

premarital agreement, even though the statute expressly places the burden 

upon the party challenging the voluntariness of the agreement. Because the 
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commissioners and our Legislature placed the burden of proof of 

involuntariness upon the party challenging a premarital agreement, it seems 

obvious that the party seeking enforcement should not be required to prove 

that the absence of any factor tending to establish voluntariness did not

render the agreement involuntary—the inevitable result were [the high 

court] to adopt the strict scrutiny standard suggested by the Court of 

Appeal.” (Id. at p. 24.)

In short, Rhona has not cited, nor are we aware of, any authority 

articulating a “heightened scrutiny” or “clear and convincing” standard of 

contract interpretation applicable to PMAs. Rather, the salient inquiry is 

whether the PMA clearly and unambiguously waives the parties’ community 

or marital property rights. 

The Creation of Community Property

The trial court phrased the first question before it as follows: “Do the 

terms of the PMA preclude the creation of community property other than as 

provided in paragraphs 3, 4, 5, 6, and 7 of the PMA or, asked another way, 

where the PMA specifically provides for the creation of community property, 

have the parties waived the application of the Family Code to that property 

or its future derivative?” As we have recited, the court answered, “NO.” 

The PMA commences with a number of recitals, including the 

following:

“B. The parties desire to provide for one another by this Agreement to 

assure their financial comfort and security, to assure the integrity of 

their respective properties brought into the marriage by each of them 

and to provide for the creation of a community estate during their

marriage.

“C. The parties enter into this marriage because of the love and 

affection each has for the other and neither is interested in acquiring 

any interest in the property of the other earned prior to their marriage.
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“D. Each of the parties presently owns property standing in their 

respective names, the nature and extent of which has been fully 

disclosed by each to the other.[6] [¶] . . . [¶]

“I. The parties desire that all property owned by either of them at the 

time of the marriage and all property coming to them from whatever 

source during the marriage shall be their respective separate property, 

except as specifically provided in this Agreement. 

“J. The parties desire that all earnings and income resulting from their 

personal services, skill, effort and work, shall be their respective separate property, except as specifically provided in this Agreement.

“K. The parties intend to acquire a residence in the State of California, 

in which case Rick intends to furnish the consideration for the purchase 

of the principal place of residence of the parties and may acquire a secondary residence as well, and intend to take title to such residences in 

the names of the parties as their community property, but with the intention of retaining the right of reimbursement for his contribution to 

the acquisition costs and the costs of capital improvements of such residence or residences under the terms of Section 2640 of the California 

Family Code. [¶] . . . [¶]

“N. The parties intend that the provisions of this Agreement shall be effective in determining each part’s rights in his or her own property and 

in one another’s property, including any rights in the estates of one another at death or their rights in the event of a divorce, the dissolution of 

their marriage or in the event of a legal separation, whether their property rights are ultimately governed by the laws of the California or any 

other jurisdiction in which they may reside.” 

These recitals evidence that the parties had multiple objectives in 

entering the PMA: They wanted to ensure that assets and property they 

owned prior to the marriage, or received by inheritance or gift during the 

6 Two attached schedules, Schedule A and Schedule B, purport to list 

this property. Schedule A lists Richard’s assets as over $80 million. 

Schedule B lists Rhona’s assets as over $2 million. 
12

marriage, remained their separate property. They wanted to create some 

community estate during the marriage. They wanted some, but not all, of 

their “earnings and income resulting from their personal services, skill, effort 

and work” during the marriage to be their separate property. They intended 

their primary residence, and any secondary residence, to be community 

property, with Rick having a right of reimbursement for his contribution to 

acquisition costs and capital improvements. They intended the provisions of 

the PMA to be controlling, regardless of the jurisdiction in which they reside 

at the time of death or when their marriage otherwise ends. 

These recitals are followed by 21 enumerated paragraphs. 

Paragraphs 1 and 2 are identical except the first pertains to Rick’s 

property, and the second to Rhona’s. The pertinent language of these 

paragraphs is as follows:

“All property, real and personal, of whatsoever nature and wheresoever 

situated, owned by [Rick/Rhona] at the commencement of the marriage, 

or inherited or received by gift during the marriage, all rents, issues, 

profits and proceeds thereof, and all appreciation in the value of such 

property occurring during the marriage, whether or not resulting from 

[his/her] personal services, skill, effort, and work, or from the personal 

services, skill, effort and work of [Rhona/Rick], subject to the provisions 

of Paragraph 5, shall be [his/her] separate property and shall be 

enjoyed by [him/her] and shall be subject to [his/her] disposition as 

[his/her] separate property . . . . [Rhona/Rick] acknowledges that 

[she/he] understands that, except for this Agreement, the appreciation 

with respect to any such property resulting from the personal services, 

skill, effort and work of Rick or Rhona rendered after the marriage 

would be community property or quasi-community property under the 

laws of the State of California, and might be characterized as marital 

property subject to equitable distribution under the laws of many states 

of the United States, but that by this Agreement such appreciation is 

made [his/her] separate property.” 

Rick maintains these paragraphs provide an “expansive definition” of 

the parties’ separate property. This is an overstatement.
13

Paragraphs 1 and 2 effectuate recitals C, D, I, and J, and confirm that 

the property each of the parties owned at the time of the marriage, as well as 

property either of them inherited or received as a gift during the marriage, is 

their separate property. This is consistent with the definition of “separate” 

property in the Family Code. (§§ 770, subd. (a), 771.) These paragraphs 

further provide as to “such” property—that is, property the parties owned at 

the time of the marriage or received by inheritance or gift during the 

marriage—that any appreciation resulting from the personal services, skill, 

effort and work of either shall also be the separate property of the party who 

owned the property at the time of the marriage or received it by inheritance 

or gift during the marriage, regardless of any community property or marital 

law to the contrary. This treatment of appreciation due to the efforts of the 

parties departs from California’s community property law. (See In re 

Marriage of Dekker (1993) 17 Cal.App.4th 842, 851 (Dekker) [“Where 

community efforts increase the value of a separate property business, it 

becomes necessary to quantify the contributions of the separate capital and 

community effort to the increase.”].)

Thus, paragraphs 1 and 2 evidence a waiver of one aspect of 

California’s community property law—the appreciation of separate property 

through community effort. These paragraphs by no means constitute 

wholesale waivers of all community or marital property rights. 

The third paragraph of the PMA states:

“Except as provided in Paragraphs 1 and 2 and the following 

Paragraphs 5, 6 and 7, all earnings of the parties from their personal 

services, skill, effort, and work shall be the community property of the 

parties.” 

This paragraph effectuates recitals B and J. It is also consistent with 

the language of the paragraphs 1 and 2 specifying that any appreciation in 
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property the parties owned at the time of the marriage or received by 

inheritance or gift during the marriage, resulting from the personal services, 

skill, effort and work of either, shall be the separate property of the party 

who owned the property at the time of the marriage or received it by 

inheritance or gift during the marriage, regardless of any community 

property or marital law to the contrary. We discuss paragraphs 5, 6 and 7, 

infra.

Notably, the third paragraph does not contain language characterizing 

as either community or separate property any income generated by 

community earnings or any appreciation in the value of assets purchased 

with community earnings. More to the point, it does not contain any 

language along the lines of that in paragraphs 1 and 2 expressly waiving 

community property and marital rights in the appreciation of separate 

property through community effort. That is, paragraph 3 does not recite that 

the income generated by community earnings or any appreciation in the 

value of assets purchased with community earnings is generally considered 

community or marital property, but the parties are agreeing to treat it 

differently. (Dekker, supra, 17 Cal.App.4th at p. 851 [“It is well settled in 

California that income produced by an asset takes on the character of the 

asset from which it flows. Thus, rents, issues and profits are community 

property if derived from community assets, and separate property if derived 

from separate assets.”].)

This appears to be what the trial court focused on in concluding that 

community property can be created in ways other than as specified in 

paragraphs 3 through 7 of the PMA. The court’s order states, for example: 

“To infer that a ‘community property waiver’ applies to any and all 

subsequent community property created in paragraphs 3 through 7 is 

not supported by the document itself, which states at B, again, that the 
15

parties’ desire to provide for the creation of a community estate during 

their marriage.” 

“[T]he PMA very clearly set forth the desire and mechanism by which 

to create a community estate during the marriage. Nowhere in the 

document is there any language that would prevent that property as 

being considered in any way other than pursuant to California 

community property law. Therefore, the community property created 

pursuant to the PMA remains community property and is subject to 

California community property law.” 

Rick asserts the court’s order reflects a “complete misunderstanding” of 

his position with respect to the PMA and the trial court “confused” the 

“concept of ‘community creation’ ” with “how the community created pursuant 

to Paragraphs 3 through 7 was used during” the marriage. (Italics added.) 

He claims he “never contended” that community income, for example, “could 

not be used for the purposes of purchasing other assets, investment, 

reinvestment or commingled with separate property,” nor did he ever “argue[]

that the community character of [community property created in accordance 

with paragraphs 3 through 7] would be forfeited or transmuted to separate 

property if such property was reinvested or used to purchase other assets.” 

The trial court did not misunderstand Rick’s position. 

As we have recited, Rhona asserted in her trial brief that paragraphs 3 

through 7 do not foreclose the creation of community property by other 

means, for example through “[i]ncome earned from, and appreciation on, 

community property” and “[f]urther investment of community property.” 

Rick’s response to this point in his responding trial brief is telling.

He first asserted that “[d]espite [the] clear and unambiguous language 

of Paragraph [recital] I, Rhona persists in insisting that community property 

may be created outside the confines of Paragraphs 3, 4, 5, 6 and 7. She 

specifically claims that community property can be created by: (1) ‘taking 
16

title to property in joint name (Family Code[,] § 2581; Probate Code[,]

§ 5305)[’]; (2) ‘income earned from, and appreciation on, community property 

and further investment of community property’; and (3) ‘commingling of 

separate and community property.’ ” He then addressed each point.

As to income earned from, and appreciation of, community property, he 

argued “Paragraph [recital] I of the PMA provides that all property coming to 

the parties from whatever source during their marriage ‘shall be their 

respective separate property, except as specifically provided for and created 

in Paragraphs 3, 4, 5, 6 and 7.’ . . . However, as Rhona acknowledges, the 

PMA contains no language providing that the rents, issues, profits and 

proceeds of any community property created through Paragraphs 3, 4, 5, 6 

and 7 and the appreciation in value of such community property occurring 

during marriage shall be likewise community property.” He went on to 

assert “[t]he omission discussed above was intentional. . . . Notably, 

Paragraphs 1 and 2 purposefully includes [sic] such income and appreciation 

in the definition of separate property.” He then maintained that “[e]ven if 

inclined to favor community property, the Court is not empowered to add the 

missing terms to Paragraphs 3, 4, 5, 6 and 7. While the Court has 

jurisdiction to enforce the PMA, it cannot add terms or provisions to the 

contract. . . . As the parties deliberately omitted to include the rents, issues, 

profits and proceeds and any appreciation in the value of any community 

property occurring during the marriage, the Court cannot add these omitted 

terms in enforcing the contract and thus no community may be created by 

this means.” 

Thus, Rick did not argue that Rhona’s “income earned from, and 

appreciation on, community property” example confused the “creation of” 

community property and the “use of” community property. Rather, he argued 
17

that the PMA expressly declares any income generated by community 

earnings or any appreciation in the value of assets purchased with 

community earnings is not community property and, instead, is separate 

property, and the parties thus waived their community property interests 

therein. To say that Rick appears to be back-pedaling on appeal is putting it 

charitably.

Nor did the trial court err in rejecting Rick’s argument that recital I, in 

conjunction with paragraphs 1 and 2, constitute a wholesale waiver of all 

community and marital property rights, including community property rights 

in any income earned from, and appreciation of any property purchased with, 

community earnings. 

When the PMA is considered as a whole, as it must be, it is apparent 

that recital I is merely that—a recital, and one of many, stating the parties’ 

multiple purposes in entering into the PMA. While recital I states “[t]he 

parties desire that all property owned by either of them at the time of the 

marriage and all property coming to them from whatever source during the 

marriage shall be their respective separate property,” it goes on to state 

“except as specifically provided in this Agreement.” Paragraph 3 is such an 

exception. In his appellate briefing, Rick also points to recital J, which states 

“[t]he parties desire that all earnings and income resulting from their 

personal services, skill, effort and work, shall be their respective separate 

property, except as specifically provided in this Agreement.” Again, recital J 

is one of many recitals setting forth the parties’ multiple purposes in entering 

into the PMA, and paragraph 3 is one of the exceptions heralded by this 

recital. 

Paragraphs 1 and 2, as we have discussed, confirm that all property the 

parties owned at the outset of the marriage and all property they receive by 
18

inheritance or gift during the marriage, is their separate property. These 

paragraphs further specify that any appreciation of this property during the 

marriage, including appreciation due to the efforts of either party, is also the 

separate property of the party who owned the property at the outset of the 

marriage or received it by inheritance or gift during the marriage. These two 

paragraphs have nothing to do with paragraph 3 and the creation of 

community earnings, let alone, any income generated by such community 

earnings or appreciation of property procured with such earnings.

In short, paragraph 3 is silent as to the character of income generated 

by community earnings and appreciation of property procured with such 

earnings. Nor do recitals I or J, or paragraphs 1 and 2 speak to this issue, let 

alone, make unequivocally clear that the parties have chosen to forego any 

community or marital property interests in such income or property. (See 

Carpenter, supra, 100 Cal.App.4th at p. 428 [where PMA was “silent” as to 

reimbursement, “it [could not] have the effect of a waiver” of the parties 

statutory right of reimbursement].) 

Accordingly, for this reason alone, the trial court did not err in 

answering the broad question put to it—“[D]o the terms of the [PMA]

preclude the creation of community property pursuant to Family Code 

[s]ection 760 et seq., except as specifically provided in paragraphs 3, 4, 5, 6, 

and 7 of the [PMA]?”—in the negative. (Italics omitted.)

Although Rick has not emphasized any particular language in 

paragraphs 4 through 7 in making his case on appeal, these paragraphs 

warrant some mention since they are entirely consistent with the trial court’s 

view, and our view, that in executing the PMA the parties waived some, but 

not all, of their community and marital property rights.
19

Paragraph 4 effectuates recital K. It reiterates that the parties intend 

to acquire a primary residence and may acquire a secondary residence, that 

Rick will fund the purchases, and that the parties will take title in both their 

names as community property. It also confirms that Rick retains the right of 

reimbursement under section 2640 for acquisition costs and costs of any 

capital improvements. It further states that if the parties acquire any 

additional residences, “either party or both shall furnish the consideration” 

and title will be taken “in such a manner as they then determine and with or 

without retaining the right of reimbursement as they shall then determine.” 

Plainly, this language does not waive any, let alone all, community or marital 

property rights. Rather, it leaves open the possibility the parties might 

purchase additional residences with Rick’s and/or Rhona’s separate property 

(or with community earnings), leaves open the manner in which they take 

title to further agreement (and says nothing about the import of taking title 

as joint tenants), and leaves open the question of reimbursement. 

Paragraph 5, like Paragraph 3, effectuates recitals B and J. It states in 

pertinent part that “[e]xcept as provided under paragraph 7 hereof, 

commencing with the year commencing on January 1, 2000, and continuing 

annually thereafter until the termination of the marriage, each of the parties 

shall transfer to the community property of the parties, a sum equal to 

twenty-five percent (25%) of his or her Total After-Tax Income from his or her 

separate property[7]. . . with the intent of transmuting such sum into the 

community property of the parties from their respective separate property. 

With each year of marriage, the percentage of the Total After-Tax Income of 

7 “Total After-Tax Income” is defined, and the manner in which it is 

calculated is set forth, in sub-paragraphs (a) through (i). The particulars of 

this complex formula are not material to the issues now before the court. 
20

their respective separate property assets shall increase to two and one-half 

percent (2.5%) increments until fifty percent (50%) of such Total After-Tax 

Income shall be transmuted to community property in the tenth (10th) year 

of marriage and every year thereafter.”8 Paragraph 5, like Paragraph 3, is 

silent as to the character of any income generated by the community funds 

created by transmutation or the appreciation of property procured with such 

funds. In short, no language waives any, let alone all, community or marital 

property rights.9 

Paragraph 6 elaborates on what “Total After-Tax Income” means in the 

year of a dissolution. For that year, such income also includes “the 

unrealized appreciation and unrecognized gain of the separate property of the 

parties, dating from the date of the marriage to the date of the filing of the 

petition for divorce . . . , determined as if all of Rick’s and Rhona’s separate 

property were sold and all such gain recognized at the termination of the 

marriage.” No language in this paragraph constitutes a wholesale waiver of 

community or marital property rights. 

8 Paragraph 8 provides that under certain specified circumstances, and 

to a certain specified extent, Rick’s transfers of his separate property will be 

reimbursed. 

9 Paragraph 10 states that until “the community property of the 

parties exceeds Three Million Dollars ($3,000,000), Rick shall deposit such 

sums as are reasonably necessary for the parties’ living expenses into a joint 

bank account from which they shall pay their living expense with no rights of 

reimbursement.” “Once the community property . . .exceeds Three Million 

dollars . . ., all normal living expenses . . . shall be paid from the community 

property earnings and the annual addition to community property under the 

paragraph 5 adjustment.” “[L]uxuries of life” may be paid for with 

“community property only with the agreement of the parties.” The paragraph 

additionally states “expenses relating to the upkeep and maintenance of 

property owned as separate property shall be paid from the separate property 

of the owner.” 
21

Paragraph 7 effectuates recitals B, C, I, and J. It states, “[i]f either 

party commences or participates in a new business or start-up company 

directly or through any corporation, partnership, or other entity, the initial 

capital of such business or start-up company shall be contributed in equal 

shares by the parties from their respective separate property, and the 

business or start-up company shall be owned by the parties in equal shares 

as their community property.” It goes on to state, “[i]f either party declines to 

invest in such business or start-up company and if the other participates in 

the operation of the new business or start-up as an employee, officer, director 

or founder, the party’s investment or contribution from his or her separate 

property shall retain its character as separate property with any appreciation 

in such investment or contribution being subject to the provisions of 

paragraph 5 hereof, but all return on any founder’s stock, stock options, or 

restricted stock which are subject to a vesting schedule or buy-back option on 

the part of the company based upon the continued services of Rick or Rhona 

to the company in whatever capacity or on any stock received as a director, 

consultant, advisor or other such position, without consideration other than 

the services rendered by Rick or Rhona in that capacity, shall be the 

community property of the parties. This paragraph places certain 

parameters on the characterization of certain business interests the parties 

may acquire during the marriage. But it does not constitute a waiver of all 

community or marital property rights.

Rick maintains paragraphs 14 and 16 also “unmistakably voiced [the 

parties’] intention and agreement to opt out and waive any” community 

property rights. Paragraph 14 states, “Each of the parties recognizes that the 

laws of California affecting the marital rights and interests of persons in the 

estates of their spouses may from time to time be changed, limited, or 
22

enlarged and that the laws of other states or countries may extend greater or 

lesser rights and interests to persons in the estates of their spouses. It is the 

intention and agreement of the parties to waive and release all such existing 

rights and interests and as they may be amended or enlarged in the future 

under the laws of California or as they may exist, be amended or enlarged in 

any other jurisdiction which may at the time be applicable.” (Italics added.) 

Reading the PMA as a whole, this paragraph plainly works in conjunction 

with paragraphs 1 and 2, whereby the parties waived any rights in each 

other’s separate property (that is, property they owned at the time of the 

marriage or received by inheritance or gift during the marriage), except as 

provided in paragraphs 3 through 7. Specifically, paragraph 14 makes clear 

that this waiver is not only a waiver of whatever statutory rights existed at 

the time the parties executed the PMA, but also of any rights created by 

subsequent law. 

Paragraph 16 states in pertinent part, “Each party has had the 

opportunity to be represented . . . by counsel of his or her own choosing. . . . 

Each of the parties has read this Agreement and is fully aware of the 

contents thereof and of its legal effect. The parties acknowledge that they 

fully understand that by this Agreement each is giving up substantial 

community property rights which each would otherwise acquire during their 

marriage and that in spite of that effect, each freely and voluntarily enters 

into this Agreement.” This is essentially a boilerplate provision designed to 

foreclose any claim either of the parties was coerced or mislead into entering 

into the PMA, or that the PMA is unconscionable and unenforceable. Plainly, 

this language does not constitute a wholesale waiver of community or marital 

property rights. 
23

In his appellant’s closing brief, Rick suggests In re Marriage of Dawley

(1976) 17 Cal.3d 342 (Dawley) and Facter, supra, 212 Cal.App.4th 967 

support his claim that the PMA waived all community and marital property 

rights. However, neither advances his case. 

The principal issue in Dawley was whether a PMA entered into by 

parties who anticipated a marriage of limited duration was void as contrary 

to public policy. The court held it was not. (Dawley, supra, 17 Cal.3d at 

p. 346.) The court also ruled a boat purchased and maintained solely with 

the husband’s separate property was his separate property even though the 

loan to purchase the craft had been extended in the names of both parties. 

(Id. at pp. 357–358.) The parties presented evidence beyond the PMA 

(including that the parties agreed to a “temporary marriage” to spare the wife 

a nonmarital pregnancy she feared would lead to her dismissal as a teacher), 

and the trial court made specific findings of fact as to the parties’ intent. (Id. 

at pp. 347–348, fn. 1.) Here, the record is decidedly different. And while 

some provisions of the PMA at issue in Dawley are similar to those in the 

PMA at issue here, in many respects the provisions of the PMA here differ, 

for example, by including provisions providing for the creation of community 

property. 

The principal issue in Facter was whether the trial court erred in 

invalidating a PMA in its entirety because it included a waiver of spousal 

support. (Facter, supra, 212 Cal.App.4th at p. 978.) The court agreed there 

was a waiver of support in light of a paragraph stating, “The provisions of 

paragraph 2, supra, [stating wife was to receive a certain amount of cash and 

half the profits on the sale of the marital residence] constitutes [wife’s] sole 

right to property acquired during the marriage and to support, and replace or 

superseded any entitlement to such property that [wife] might otherwise 
24

have under law.” (Id. at p. 979, 983.) It also agreed spousal support could 

legally be waived, but held the waiver at issue was unconscionable and 

therefore unenforceable. (Id. at pp. 980–984.) The court additionally agreed 

the spousal waiver could be severed, leaving the remainder of the PMA in 

force. (Id. at pp. 985–991.) In discussing severance, the court stated in 

passing that one of the paragraphs “effectively constitut[ed] a waiver of 

community property rights.” (Id. at p. 989.) That paragraph, set forth in a 

four-page document under a heading entitled “ ‘Property Rights,’ ” stated: 

“ ‘In consideration of their sharing a home, and of their marriage, and of the 

promises contained in this agreement [the parties] agree as follows: 

[¶] . . . [¶] 1.None of the property acquired during their marriage shall be 

community property.’ ” (Id. at p. 971, fn. 2.) The 16-page PMA here is not 

remotely comparable. 

In sum, the PMA at issue here alters some of the community or marital 

property principles that would otherwise apply absent the PMA. But no 

language can be characterized as an unequivocal, wholesale waiver of 

community or marital property rights, particularly with respect to matters on 

which the PMA is silent.

Tracing 

The trial court phrased the second question before it as whether “[b]y 

entering into the PMA, did the parties contract out of their respective duties 

to trace separate property claims under the California community property 

law? Its answer, again, was “NO.” 

The court explained its answer as follows:

“The PMA provides not only for the creation of community property and 

separate property, it specifically provides for its commingling. 

Although paragraph 4 specifically calls out the obligation to trace by 

referencing Family Code [s]ection 2640, the PMA is riddled with the 

possibility of commingling the parties’ separate and community 
25

property. The fact that Family Code [s]ection 2640 was not referenced 

in each place that the PMA could result in commingling did not amount 

to the parties waiving or contracting out of that obligation. . . . [N]or 

does the language of the PMA support the argument that the parties 

waived all provisions of the Family Code regarding the obligation of 

tracing.” 

“Tracing” is used to determine the character of property acquired 

during a marriage and, more specifically, whether the property was acquired 

with or generated by separate or community property, or both. (See generally 

In re Marriage of Ciprari (2019) 32 Cal.App.5th 83, 90–91 (Ciprari).) Parties 

have a great deal of latitude in the methodology used to trace the source of 

assets. Traditionally, parties have often used “direct tracing”10 or 

“exhaustion tracing.”11 However, as the court discussed in Ciprari, parties 

are not limited to these two methods. To the contrary, “trial courts have the 

flexibility to consider any credible evidence and to evaluate alternative 

tracing methods to determine whether the proponent of the tracing carries 

his or her burden of proof. The tracing method may vary depending on the 

10 “ ‘Direct tracing’ can be used to demonstrate a spouse’s separate 

property was used to purchase an asset, even though the purchase is made 

with funds from a commingled account containing both separate and 

community property. It requires (a) documentary proof that sufficient 

separate property funds were available in the account at the time of purchase 

and (b) proof that the spouse making the purchase intended to use separate, 

rather than community, funds.” (Ciprari, supra, 32 Cal.App.5th at pp. 95–

96.)

11 Exhaustion tracing “attempts to trace a payment or purchase from a 

commingled mass to separate property funds by process of elimination; i.e., 

by showing that—because all community property funds were exhausted at 

the time the purchase or payment at issue was made—separate property

funds necessarily must have been used. [Citation.] This approach presumes 

that available community property funds are used for family expenses before 

separate property funds are used for that purpose.” (Ciprari, supra, 

32 Cal.App.5th at p. 96.)
26

facts. Thus, trial courts are free to consider and credit reasonable, wellsupported, and nonspeculative expert testimony, when determining whether 

the proponent has successfully traced commingled assets to a separate 

property source.”12 (Ciprari, at p. 97.)

Since we agree with the trial court that the parties could create 

community property by means other than as set forth in paragraphs 3 

through 7 of the PMA—for example, by investment of, or the purchase of 

property with, community earnings created pursuant to paragraph 3—it is 

certainly possible, as the trial court recognized, that the parties may dispute 

whether a particular investment or property was procured with community 

and/or with separate property. The only feasible way the trial court can 

resolve such a dispute is with tracing evidence. 

Rick acknowledges he must present tracing evidence in connection with 

reimbursement for the purchase of the parties’ primary and secondary 

residences, and capital improvements thereof, since paragraph 5 makes 

express reference to section 2640.13 He asserts, however, that neither he nor 

Rhona has any other obligation to conduct what he calls “Family Law 

Tracing” because “the parties explicitly waived all their existing rights and 

interests under California community property law,” and “[i]ncluded in such 

waiver is a waiver of the community property presumption under Family 

12 Accordingly, Rick’s complaint that there are significant constraints 

on the kinds of evidence that can be presented to support tracing, making 

tracing unduly burdensome, is unfounded. 

13 Section 2640 states in pertinent part, “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.” 

(§ 2640, subd. (b).)
27

Code section 760.” He maintains “there is not a single term in the PMA 

which specifically provides that the . . . section 760 community property 

presumption or any community property presumption applies to commingled 

accounts and/or assets acquired during the marriage.” 

To begin with, Rick has it backwards. PMAs are not required to 

expressly confirm statutory community or marital property rights, including 

the presumptions that pertain thereto. To the contrary, PMAs are a means 

to contract out of these rights as to some or all of the parties’ property, and to 

do so, they must clearly and unequivocally express such intent. If they do so, 

the waiver encompasses, of course, statutory presumptions pertinent to such 

property. (See Dawley, supra, 17 Cal.3d at p. 357 [“the presumptions of the 

Family Law Act do not govern the status of marital property when ‘there is a 

marriage settlement containing stipulations contrary thereto’ ”].) 

Here, however, the parties did not, contrary to Rick’s claim, “contract[] 

out of the entire system of California community property” and thereby 

embrace a “default rule that all property” is the separate property of one or 

the other of the two parties. As we have discussed, the parties waived their 

community and marital property rights only as to some assets, leaving open 

the possibility, indeed the likelihood, that characterization issues would arise 

on divorce or death. Nowhere in the PMA is there any provision that clearly 

and unequivocally waives their respective obligations to present legally 

sufficient evidence to enable the court to rule on the character of any asset or 

property as to which there is a dispute.

DISPOSITION

The order after hearing dated February 22, 2022, regarding the 

interpretation of the PMA, is AFFIRMED. Respondent to recover costs on 

appeal.
28

_________________________

Banke, J.

We concur:

_________________________

Margulies, Acting P.J.

_________________________

Bowen, J.*

**Judge of the Contra Costa County Superior Court, assigned by the Chief 

Justice pursuant to article VI, section 6 of the California Constitution.

A164992, Thompson v. Thompson