In re Marriage of Sherman

In In re Marriage of Sherman (2005) 133 Cal.App.4th 795, the court addressed the application of the Moore/Marsden rule under circumstances closely resembling those before us, which involve the use of community funds (1) to pay down the pre-marital mortgage on a separate property residence, and (2) to improve the residence at or shortly after the time of the marriage. In Sherman, a man bought a house in 1993 for approximately $ 1.2 million, and then married in 1995. (Id. at p. 798.) He and his wife used community funds to pay down the original mortgage before he obtained a new mortgage, which replaced the original mortgage and provided approximately $ 500,000 in additional funds. (Ibid.) Some of these funds were then expended to improve the house. (Ibid.) At issue in Sherman was whether the house's pre-marital appreciation should be credited as an element of the man's separate property investment in the house, for the purpose of determining the separate property percentage interest and the community property percentage interest in the house's marital appreciation. (Sherman, supra, 133 Cal.App.4th at pp. 802-803.) The court in Sherman rejected the Bono v. Clark (2002) 103 Cal.App.4th 1409 court's departure from the Moore/Marsden rule on this matter, reasoning that the special circumstances that supported this departure in Bono were not present in Sherman: unlike Bono, community funds were used to pay down the original mortgage from the inception of the marriage, and the improvements were made soon after the marriage. (Sherman, supra, 133 Cal.App.4th at pp. 802-803.)