Opinion ID: 1427701
Heading Depth: 2
Heading Rank: 2

Heading: Classification of the greenhouse improvements as separate or community property.

Text: We have indicated that the district court erred by factoring the cost of the improvements into the calculation of the respective property shares in the Malmquists' principal residence. Before we can address the question of apportionment of the improvements, we must first classify the improvements as separate or community property. Of the total of $62,707 in improvements, the $25,000 spent on the kitchen remodeling is conceded to be community property. The issue presented by Kenneth's appeal is whether the remaining $37,707 paid for the greenhouse improvement is community property or Kenneth's separate property. Kenneth argues that, contrary to the district court's decision, the stipulation quoted above establishes conclusively that the greenhouse was paid for from his separate property. Kenneth received his share of the proceeds from the sale of the I Street partnership by check made payable to both Nancy and him. This check was endorsed by the parties and deposited in their joint checking account. The greenhouse improvements were paid for from this account. The district court found that both community and separate property funds were commingled extensively in the joint account from which the greenhouse payments were made. Once an owner of separate property funds commingles these funds with community funds, the owner assumes the burden of rebutting the presumption that all the funds in the account are community property. Lucini v. Lucini, 97 Nev. 213, 215, 626 P.2d 269, 271 (1981); Marsden, 181 Cal. Rptr. at 918. Generally speaking, there are two ways to rebut the presumption that commingled funds are community property: (1) direct tracing of the source of a particular purchase to the separate property portion of the account, or (2) proof that at the time of the purchase all community income was exhausted by family expenses. Marsden, 181 Cal. Rptr. at 918. Neither party to this appeal argues for application of the exhaustion method. Therefore, Kenneth must shoulder the burden of direct tracing. Direct tracing requires Kenneth to establish that the timing and amounts of separate property deposits and withdrawals to pay for the improvements clearly indicate that the payments came from separate property funds, as Kenneth claims he intended. Marsden, 181 Cal. Rptr. at 919. The documentary evidence in support of Kenneth's direct tracing consisted of exhibits introduced at trial. These exhibits were not made part of the record on appeal. Accordingly, the only question before this court is whether the stipulation sufficed as a matter of law to satisfy Kenneth's burden of direct tracing. We conclude that the stipulation does not satisfy this burden as a matter of law and therefore affirm the district court's classification of the greenhouse improvement as community property. The stipulation, while somewhat ambiguous, arguably establishes that Kenneth's separate property was deposited into the joint account and that the greenhouse was paid for using the money so deposited in this joint account. Kenneth argues that this alone satisfies his burden of tracing. Again, however, the bank accounts are not part of the record on appeal. Thus, the record before us does not establish when money was deposited into the joint account or withdrawn for the greenhouse improvement. We do not know the balance in the joint account at the relevant times. Based on all the evidence presented at trial, the district court determined that, despite the stipulation, the money was commingled in a joint account and Kenneth had not sustained his burden of tracing the money for the greenhouse to his separate property deposits into the joint account. Without the bank records, we are unwilling to disturb the district court's determinations on the strength of the stipulation alone. After reviewing the bank accounts and hearing the testimony of the parties, the district court could have concluded that the evidence was sufficiently strong to support a finding of commingling and that the stipulation concerning the funds was not sufficient to refute this. Based on the record before us, we cannot conclude as a matter of law that the district court erred in determining that the greenhouse improvement was made from community funds.