Filed 9/24/18 Marriage of Story CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

This appeal is from an October 25, 2016 statement of decision after a two-day court trial in a dissolution of marriage. The primary issue at trial was whether the source of the down payment for the May 2002 purchase of the parties’ home on Webster Avenue in Monterey (Webster home) was community or separate property. James Story (James) asserted it was community property, while Rone Story (Rone) contended the down payment derived from her separate property.[1] The court held that Rone had failed to establish that the funds used for the down payment were her separate property and she was therefore not entitled to reimbursement for that down payment under Family Code section 2640, subdivision (b).[2]

Rone asserts three main claims of error. Her main contention on appeal is that the court below erred in denying her request for reimbursement. She contends that she established through tracing that her separate property was the source of the down payment, and there was no basis for crediting James’s position that the Webster home was purchased with community funds. She asserts that James’s position was based upon his vague and uncorroborated testimony that he received earnings as a self-employed handyman/maintenance man between 1994 and 2002 that resulted in community savings used for the down payment—which testimony was contradicted by documentary evidence that he reported little or no income to the federal government during the relevant years. Rone contends further that, because James’s testimony could not be credited, there was no substantial evidence supporting the conclusion that the source of the down payment for the purchase of the Webster home was community funds. And she argues that the trial court’s findings in its statement of decision rejecting Rone’s testimony concerning her tracing of separate property funds to the down payment were “speculative, contrary to the record, contradictory and an abuse of discretion.” (Capitalization omitted.)

Second, Rone contends that the court abused its discretion by barring the testimony of a potential witness, Rone’s daughter. At the commencement of trial, the court had, pursuant to Evidence Code section 777, ordered that all witnesses be excluded. Rone’s daughter, however, remained in the courtroom and heard testimony, and the court therefore ruled that she would not be permitted to testify to matters concerning the Webster home.

Third, Rone contends that the court abused its discretion by failing to determine the net value of the community interest in the Webster home and to order an allocation of that asset between the parties.

We conclude that there was no substantial evidence supporting the court’s conclusion that the source of the down payment of the purchase of the Webster home was not Rone’s separate property; therefore, the court erred in denying Rone’s claim for reimbursement. We hold further that the court did not abuse its discretion by barring the testimony of Rone’s daughter. We will reverse the October 25, 2016 statement of decision and will remand the case to the trial court for further proceedings.

I. PROCEDURAL HISTORY

James filed a petition for dissolution of his marriage with Rone on February 26, 2015. At the time of their separation on or about May 20, 2012, they had been married for over 23 years. They have no children.

The court conducted a two-day trial that concluded on May 2, 2016. The main issue presented at trial was whether the source of the down payment for the purchase of the Webster home was Rone’s separate property. At the conclusion of the trial, the court submitted the matter; it also terminated marital status, effective May 2, 2016.

On June 6, 2016, the trial court filed its written tentative decision. It noted that there was no dispute that the Webster home was a community asset. As to the disputed issue of Rone’s claim for reimbursement, the court concluded that she had failed to establish that her separate property was the source of the down payment for Webster home’s purchase. The court concluded further that the fair market value of the Webster home was $550,000, the value to which James’s expert appraiser testified. In so concluding, the court rejected Rone’s claim (through her own expert) that the value of the Webster home was $360,000.

Rone filed a request for statement of decision pursuant to Code of Civil Procedure section 632. On October 25, 2016, the court filed its statement of decision, confirming its tentative decision finding in favor of James concerning Rone’s request for reimbursement of separate property contributed to purchase the Webster home.[3] The court reserved jurisdiction over the issue of permanent spousal support, finding that, although there had been a long-term marriage, the parties had not addressed at trial the factors required to render a decision on this issue. And the court denied an award of attorney fees to either party.[4]

Rone filed a timely notice of appeal from the statement of decision. (See Alan v. American Honda Motor Co., Inc. (2007) 40 Cal.4th 894, 901 [statement of decision appealable when it “is signed and filed and does, in fact, constitute the court’s final decision on the merits”].)

II. STATEMENT OF RELEVANT FACTS

A. Background Facts

James and Rone were married in September 1988. For approximately the first two years of their marriage, they lived in a residence acquired by Rone before the marriage on Angelus Way in Del Rey Oaks (Del Rey Oaks home). Title to the home was solely in Rone’s name. She had purchased it for $140,000. After they were married, James, at Rone’s request, signed a quitclaim of any interest he might have had in the Del Rey Oaks home. In or about July 1990, Rone sold the Del Rey Oaks home for approximately $285,000, and she purchased a home on Mar Vista in Monterey (Mar Vista home) from John Zach. Title to that home was also in Rone’s name, and she used “a lot of [her] money” from the sale of the Del Rey Oaks home to buy the Mar Vista home. James signed a quitclaim deed in August 1990 divesting himself of any interest in the Mar Vista home.

Approximately two years after Rone bought the Mar Vista home, she and James moved to a rental house on Dune Crest in Monterey, and they rented out the Mar Vista home. In 1993, James separated from Rone, and he moved to Antioch and lived with his mother. In July 1994, Rone was involved in a serious automobile-pedestrian accident on the freeway in Marina. Rone testified that she arrived at the hospital “a DOA.” After the accident, James returned to the Monterey Peninsula, and he moved back in with Rone in Monterey after she returned home from the hospital.

In May 2002, James and Rone purchased a home on Webster Street in Monterey (Webster home) for $340,000. Title to the property was held under the names of James and Rone as joint tenants as to an undivided 50 percent interest, and Michelle Larkin (Michelle), Rone’s daughter, as her sole property, as to an undivided 50 percent interest. Michelle’s name was placed on title because she was earning substantial income which helped the parties qualify to purchase the Webster home. (Evidence concerning the source of the down payment for the Webster home purchase, i.e., whether the funds traced to community property or to Rone’s separate property, is discussed in part B, post.)

After the purchase, James made efforts to improve the Webster home. According to Rone’s testimony, James “redid part[s] . . . of the . . . bedrooms and the bathroom, and part of the kitchen.” James also did some work on a guest unit that was “run down” to make the unit rentable. James confirmed in his testimony that he performed extensive work on the guest unit, kitchen, bathroom, and bedroom, including painting and work on the flooring. He stated that he and Rone continued to live in an apartment unit on Third Street for approximately one year after buying the Webster home while he performed work on it so they could eventually live there. Afterwards, in or about 2003, they moved into the Webster home.

In or about May 2012, James moved out of the Webster home. This was the final separation of the parties. Rone testified that at the time of separation, the Webster home was in need of repair. There was substantial testimony presented concerning those repairs, which were performed by Rone’s son-in-law, Marshall Larkin. Rone expended $62,844 to have the repairs performed on the Webster home.

B. Source of Webster Home Down Payment

Rone testified that her separate property was the source of almost the entire down payment for the purchase of the Webster home. The essence of her testimony was that in 1996, she had purchased an annuity with Keyport Life Insurance Company (Keyport) using her separate property. (Hereafter, this account is referred to as the Keyport annuity.)[5] She testified that the proceeds from this annuity were used to make the down payment for the Webster home purchase in May 2002.

Rone testified that in December 1994, she obtained $30,000 from State Farm Insurance, the driver’s insurer, in settlement of her claim for personal injuries she sustained in the accident in Marina. She deposited those settlement proceeds with Monterey County Bank

In 1995, Rone filed a lawsuit against Zach, the seller of the Mar Vista home. She alleged that Zach had sold her the property with a “cracked foundation.” After having obtained a judgment, she entered into a settlement in 1996 with Zach in which she received $15,000.[6]

After the settlement of the Zach lawsuit, in April 1996, Rone—upon the recommendation of her banker—combined the $15,000 from that settlement with the $30,000 from the personal injury settlement to purchase the Keyport annuity. As explained to Rone by the banker, the annuity’s original value of $45,000 would grow substantially if Rone did not make withdrawals for seven years. Rone made one withdrawal from the Keyport annuity in May 2001 of $15,400 so that her son could buy a truck. Rone testified that on April 24, 2002—more than seven years after purchasing the annuity—at her direction, a full 1035 exchange[7] was processed and the entity in charge of the Keyport annuity sent all of the funds from the account ($78,810.75) to New York Life Insurance Company (New York Life).[8] And Rone testified that after these funds were transferred to New York Life, they were used in their entirety to fund the down payment for the Webster home.

Rone’s counsel introduced as an exhibit a borrower’s settlement statement generated in the purchase of the Webster home in May 2002 that noted that the cash required to close was $89,146. Rone testified that she used the full amount of her Keyport annuity, which was the $78,810.75 amount transferred in April 2002 to New York Life, for the down payment. Rone stated that closing costs and possibly a small portion of the down payment were paid by her daughter, Michelle.

C. Income During Marriage

James worked as a maintenance man/handyman during his marriage with Rone. Early in the marriage, he worked as a maintenance man for Highlands Inn and later at Monterey Convalescent Hospital until his first separation from Rone in 1993. Upon returning to Monterey and moving back in with Rone in or about 1994, he was self-employed as a handyman until the final separation in 2012.

Rone worked before the parties were married in 1988. Her last employment was at a bowling alley. She ceased working there when she and James married. And Rone did not work outside the home during the entire marriage, at least in part because of the severe injury she sustained in 1994.

James presented no documents verifying the work income he received during the marriage. He testified that throughout the marriage, his procedure was to give Rone the income that he earned and she would pay the household bills. James stated that early in the marriage—from approximately 1988 to 1996—he earned approximately $300 per week. He testified that in or about 1996, his earnings increased to approximately $600 per week, and “sometimes more.” James testified that as of 2002, when the Webster home was purchased, he contributed between $600 to $800 per week to the community.

James initially testified on cross-examination he reported his 1997 and 1998 earnings to the government. He was then asked about a December 22, 2015 Social Security statement transmitted to him that was admitted into evidence. James’s earnings history during the parties’ marriage, as reflected on the exhibit, was as follows:

1988 $11,789 2001 $ 7,813

1989 $18,749 2002 $13,255

1990 $20,405 2003 $ 2,403

1991 $22,518 2004 $ 2,878

1992 $17,500 2005 $ 0

1993 $14,307 2006 $11,393

1994 $17,797 2007 $ 8,801

1995 $ 2,560 2008 $13,849

1996 $ 0 2009 $ 4,743

1997 $ 0 2010 $ 4,694

1998 $ 0 2011 $ 0

1999 $ 3,117 2012 $ 0

2000 $ 9,686

James testified that for the three years in the 1990’s it was reflected on the exhibit that his earnings were zero (1996 through 1998), he in fact had earnings but could not identify the amounts. He testified that he “[didn’t] know if [he] filed those years.” And he later confirmed that he had not filed tax returns for seven years. On redirect examination, James testified that for much of the time, he had worked “under the table.”

James testified that in the early years of the marriage, there was no surplus of cash from his earnings after community expenses were paid. Later, after his earnings increased (from approximately 1996 forward), he understood that he was giving Rone more money than was needed for community expenses and that as a result, she was saving money.

Rone testified that at the time they were married, James did not own any property. The community expenses, both while they lived at the Del Rey Oaks home and the Mar Vista home, were paid in part from income from renters at those properties and in part from James’s earnings. But, according to Rone’s testimony, there were many occasions in which she withdrew separate property funds to pay for expenses or specific items that were needed. She testified that after the first separation, the money James “gave [her] covered the bills” but there was not a surplus of funds. She stated, “He was not making that much.” Rone testified that while James was self-employed, his income was variable: “Sometimes there was [sic] no clients; other times there was [sic] three or four.” She estimated that the maximum amount James made while he was self-employed during the marriage was between $17,000 and $20,000.

III. DISCUSSION

A. Applicable Law

Under the Family Code, there is a presumption that all property acquired during marriage while the parties are living in this state is community property. (§ 760.)[9] But the earnings and accumulations of a spouse after separation constitute that spouse’s separate property. (§ 771.) And damages recovered from a judgment or settlement arising out of a personal injury claim are the separate property of the injured spouse if the claim arose while he or she was separated from the other spouse. (§ 781, subd. (a)(2).)

Additionally, there is a presumption that property acquired by the parties during marriage in joint form is community property for purposes of the division of that property upon dissolution or legal separation. (§ 2581.) That presumption may be rebutted by either a clear statement in the deed or other title documents showing the property was acquired as separate property or proof that the parties agreed in writing that the acquired property was separate property. (Ibid.)

Where a party contributes separate property to acquire an asset during the marriage, while that contribution does not defeat the statutory presumptions that the acquired property is community property, the contributing spouse, under section 2640, subdivision (b)[10] will have a prima facie right of reimbursement in the division of that acquired asset upon dissolution. (2 Hogoboom & King, Cal. Prac. Guide: Family Law (The Rutter Group 2018) ¶ 8:430, p. 8-155.) The right of reimbursement includes separate property contributions made for down payments. (§ 2640, subd. (a).) The party claiming the right of reimbursement bears the burden of tracing the contribution to a separate property source. (In re Marriage of Cochran (2001) 87 Cal.App.4th 1050, 1057-1058.) The reimbursement award comes “ ‘off the top’ ” of the community property item at issue, i.e., prior to division of the community property. (In re Marriage of Walrath (1998) 17 Cal.4th 907, 913.) And the contributing spouse, under section 2640, subdivision (b), has a “vested property right” to reimbursement for his or her separate property contribution. (In re Marriage of Walrath, supra, at p. 919.)

The entitlement to reimbursement under section 2640 presupposes the separate property nature of the spouse’s contribution. In an instance in which there is a comingling of community and separate property funds, the spouse seeking reimbursement may establish that the contribution (i.e., withdrawal from the joint account) was his or her separate property in two different ways. Under the first, “ ‘direct tracing’ method, the disputed asset . . . is traced to the withdrawal of separate property funds from the comingled account. This method requires specific records reconstructing each separate and community property deposit, and each separate and community property payment as it occurs.” (In re Marriage of Braud (1996) 45 Cal.App.4th 797, 823.) Under the second method, the spouse seeking reimbursement may establish the separate property character of the contribution “[u]nder the ‘family living expense’ or ‘recapitulation’ method, [under which] it is assumed that family living expenses are paid out of community property funds. [Citations.] Payments may be traced to a separate property source by showing community income at the time of the payments or purchase was exhausted by family expense, so that the payments or purchase necessarily must have been made with separate property funds. [Citations.]” (Id. at pp. 823-824; see also In re Marriage of Mix (1975) 14 Cal.3d 604, 612.)

B. Standard of Review

The appellant bears the burden of establishing trial court error. (Barrie v. California Coastal Com. (1987) 196 Cal.App.3d 8, 16.) “All issues of credibility are for the trier of fact, and all conflicts in the evidence must be resolved in support of the judgment. [Citation.] The trial court’s judgment is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness. [Citation.]” (In re Marriage of Nichols (1994) 27 Cal.App.4th 661, 670.)

Where a spouse seeks right of reimbursement based upon a claimed separate property contribution, whether he or she has met that “burden of tracing to a separate property source is a question of fact and the trial court’s holding on the matter must be upheld if supported by substantial evidence.” (In re Marriage of Cochran, supra, 87 Cal.App.4th at p. 1058; see also In re Marriage of Braud, supra, 45 Cal.App.4th at p. 825.) It is the appellant’s burden to establish that the judgment or appealable order is not supported by substantial evidence. (In re Adoption of Allison C. (2008) 164 Cal.App.4th 1004, 1011.)

An appellate court in applying the substantial evidence standard is not concerned with “whether there is ‘substantial conflict’ in the evidence but, rather, whether the record as a whole demonstrates substantial evidence in support of the appealed judgment or order. [Citation.]” (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2017) ¶ 8:39, p. 8-20.) “When a trial court’s factual determination is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination. . . . If such substantial evidence be found, it is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion. [Citations.]” (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874, original italics (Bowers).)

The Second District Court of Appeal, in attempting to define “substantial evidence,” has provided the following useful description: “ ‘Substantial evidence’ is evidence of ponderable legal significance, evidence that is reasonable, credible and of solid value. [Citations.] ‘Substantial evidence . . . is not synonymous with “any” evidence.’ Instead, it is ‘ “ ‘substantial’ proof of the essentials which the law requires.” ’ [Citations.] The focus is on the quality, rather than the quantity, of the evidence. ‘Very little solid evidence may be “substantial,” while a lot of extremely weak evidence might be “insubstantial.” ’ [Citation.] Inferences may constitute substantial evidence, but they must be the product of logic and reason. Speculation or conjecture alone is not substantial evidence. [Citations.] . . . [¶] The ultimate test is whether it is reasonable for a trier of fact to make the ruling in question in light of the whole record. [Citation.] ‘A formulation of the substantial evidence rule which stresses the importance of isolated evidence supporting the judgment, . . . risks misleading the court into abdicating its duty to appraise the whole record. . . . [Citations.]’ [¶] Substantial evidence is therefore not merely an appellate incantation designed to conjure up an affirmance. To the contrary, it is essential to the integrity of the judicial process that a judgment be supported by evidence that is at least substantial. An appellate court need not ‘blindly seize any evidence . . . in order to affirm the judgment. The Court of Appeal “was not created . . . merely to echo the determinations of the trial court. A decision supported by a mere scintilla of evidence need not be affirmed on review.” ’ ” (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651-652 (Roddenberry).)

As noted, substantial evidence may be founded upon reasonable inferences drawn from the record. (Bowers, supra, 150 Cal.App.3d at p. 874.) But “such inferences must be ‘a product of logic and reason’ and ‘must rest on the evidence’ [citation]; inferences that are the result of mere speculation or conjecture cannot support a finding [citations].” (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633 (Kuhn).)

And as the California Supreme Court has recently summarized, “Substantial evidence is a deferential standard, but it is not toothless. It is well settled that the standard is not satisfied simply by pointing to ‘ “isolated evidence torn from the context of the whole record.” ’ [Citations.] Rather, the evidence supporting the [court’s] finding must be considered ‘ “in the light of the whole record” ’ ‘to determine whether it discloses substantial evidence—that is, evidence which is reasonable, credible, and of solid value. . . .’ [Citation.]” (In re I.C. (2018) 4 Cal.5th 869, 892.)

C. Source of Funds for Webster Home Down Payment

Rone asserted below that the source of most of the down payment for the Webster home purchase was her separate property, namely, the funds in the amount of $78,810.75 in her Keyport annuity that were transferred to New York Life in April 2002 and then used for the purchase transaction. The trial court rejected this position and therefore denied Rone’s claim for reimbursement, concluding, in part, that because the evidence showed that Rone withdrew more than 85 percent of the principal balance of the Keyport annuity, “it is difficult to believe . . . that there would have been money remaining in her annuity to have completely provided the down payment on the Webster Street property.”

The evidence, however, was undisputed that Rone purchased the Keyport annuity in April 1995, using the $30,000 settlement proceeds from her personal injury settlement and $15,000 she received in her settlement of her lawsuit with Zach concerning her claim that the Mar Vista home’s foundation was defective. No argument was asserted by James that the funds used to purchase the Keyport annuity were not Rone’s separate property. (See § 781, subd. (a)(2).) Rone also established, based upon a trial exhibit introduced into the record, that the Keyport annuity appreciated in value so that, as of May 22, 2001, the premium was $93,409.55.[11]

Further, Rone showed, through her testimony and through a trial exhibit, that on April 24, 2002, the Keyport annuity account, at her direction was closed and all funds from the account ($78,810.75) were sent to New York Life. Rone testified that the funds were then transferred from New York Life to purchase the Webster home. And as shown in another trial exhibit, the timing of the Keyport annuity transaction (April 24, 2002) coincides with the Webster home purchase transaction: In a borrower’s settlement statement dated May 4, 2002, it was reflected that after applying the proposed loan amount, the cash (including closing costs) required from the buyers to purchase the Webster home was $89,146.65. It was Rone’s testimony that the funds from her Keyport annuity ($78,810.74) were supplemented with money from her daughter, Michelle, to make up the balance of the closing costs and down payment to complete the purchase transaction.

The trial court below rejected this evidence and found that Rone had not established that she had used her separate property for the down payment to purchase the Webster home. The court provided a statement of decision, a document which “facilitates appellate review by revealing the bases for the trial court’s decision. [Citation.]” (In re Marriage of Fong (2011) 193 Cal.App.4th 278, 293, fn. omitted.) Without the statement of decision, “ ‘the judgment is effectively insulated from review by the substantial evidence rule,’ as we would have no means of ascertaining the trial court’s reasoning or determining whether its findings on disputed factual issues support the judgment as a matter of law. [Citation.]” (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 982.)

A careful review of the trial court’s statement of decision and the entire record in this case show that the court made factual findings that were not supported by substantial evidence. These unsupported findings served as the bases for the court’s conclusion that the source of the down payment for the Webster home was not Rone’s separate property. The chief factual findings by the court that were not supported by substantial evidence were that (1) Rone had no accounts during the marriage containing separate property funds other than the Keyport annuity account, and therefore any separate property funds she required for any expenses would have had to come from the Keyport account; and (2) Rone’s $25,000 gift to her daughter was withdrawn from the Keyport annuity and, therefore, this annuity could not have been the source for the Webster Street down payment.

The court concluded that “[Rone] established that $45,000 was used to purchase an annuity [i.e., the Keyport annuity] . . . on April 3, 1996.” The court noted that although Rone contended that “all of the money for the down payment came from her separate property annuity,” there was “testimony and documentation that call[ed] into question the source of the down payment.” We quote and discuss relevant portions of the statement of decision below to explain our conclusion that the court’s finding that Rone’s separate property was not the source of the down payment was not supported by substantial evidence.

1. “Primarily, [Rone] testified that in addition to money gifted to her son, she gave $25,000 to her daughter for the purchase of a residence in Marina. . . . This withdrawal alone would have reduced the principal in the [Keyport] annuity account by more than one-half. The two withdrawals together [the $25,000 gift to Rone’s daughter and $15,400 withdrawal for the purchase of a truck for Rone’s son] would have left only $4,600 from the original investment, plus whatever interest had been earned.”

There was no testimony, however, that the source of the $25,000 gift to Rone’s daughter was a withdrawal from the Keyport annuity. And there was significant evidence presented to the contrary.

During examination by James’s counsel under Evidence Code section 776 on the first day of trial, Rone testified that she gave her daughter between $20,000 and $25,000 to purchase a home in Marina. Rone testified that the source of the funds for the gift was an “annuity I had with New York Life. I took my annuities.” She explained that the Keyport annuity was not her first annuity. “I’ve owned four houses on the [P]eninsula. So I would give money—whenever I sold a house, I would put that money—give it to New York Life.” Rone testified that she initially placed money into a New York Life account when “I had a house on the beach, which was quite a while back.” She stated that she had owned two homes on the beach at one time. She testified further that the New York Life account was established sometime before her accident in 1994.

On the second trial day while she was subject to recross-examination, Rone corrected the assertion of James’s counsel that the funds for the $25,000 gift to her daughter were obtained from the Keyport annuity. James’s counsel first confirmed that the Keyport account at one point had grown to approximately $90,000,[12] and that, after deducting $15,000 withdrawn so that Rone’s son could buy a truck, this left a balance of approximately $75,000. The following exchange took place between James’s counsel and Rone: “Q. So, if we take the [$]25,000 from the [$]75,[000,] isn’t it true we’re down to [$]50,000 left? [¶] A. I had money in my trust funds, and I used that money for my daughter. It was not given out of any of that money I kept in there for seven years. [¶] Q. What trust fund? [¶] A. I have New York Life annuities that I used that money from, from the prior sale of Del Rey Oaks home, not— [¶] Q . Isn’t it true you only had one annuity with Keyport and there weren’t any others? [¶] A. One annuity with Keyport. No, there was another one.”

Rone’s testimony was corroborated by a trial exhibit—a letter from Delaware Life dated January 20, 2016—reciting the activity for Rone’s Keyport annuity account. It was stated in that Delaware Life letter, inter alia, that the annuity policy was issued on April 3, 1996, with a cash payment of $45,000, and there was a partial withdrawal on May 2, 2001 for $15,400. There was no reference in the Delaware Life letter to any other withdrawals before the account was closed in April 2002.

And James testified that Rone told him at the time of the gift that the source of the $25,000 gift to Rone’s daughter was New York Life. He testified: “She got it out of her annuity, New York Life.”

The trial court’s finding that the $25,000 gift to Rone’s daughter was based upon funds withdrawn from the Keyport annuity was not supported by substantial evidence. Any inference that the Keyport annuity was the source of the $25,000 gift—thereby depleting the annuity account—was not reasonably based upon the record. (See Kuhn, supra, 22 Cal.App.4th at p. 1633 [substantial evidence may not consist of inferences if they “are the result of mere speculation or conjecture”].)

2. “[Rone] further testified that she has not worked since her accident in 1994. That subsequent to her accident, [James] was the sole source of the family’s income. Although ‘every once in a while, if something was very much needed, [she] would take out money’ from her annuity. [James] estimated that a used van, purchased by [Rone] subsequent to her accident, cost approximately $3,000. In that [Rone] testified the only funds she had were in her annuity, this would have further reduced the balance in this account.”

First, although it was undisputed that Rone did not work outside the home after her accident, there was evidence that the family received income from sources other than from James’s work. There was evidence that over the years, the couple received rental income from the Del Rey Oaks home, the Mar Vista home, and the Webster home.

Second, Rone initially testified that there were “lots of times [she] would take out money for [her] needs and to buy certain things or pay for certain things.” She was then asked by James’s counsel whether she was “drawing money from the annuity,” to which she responded, “I said every once in a while, if something was very much needed, I would take out money for that.” Other than the reference to “the annuity” in the question from James’s counsel, there was no further description as to the source of Rone’s separate property funds that she used to pay for additional expenses. And in her testimony in close proximity that preceded this discussion, she described the New York Life annuity, as discussed above, that was established before the marriage and was distinct from the Keyport annuity. Thus, although the trial court concluded that Rone testified she drew money from the Keyport annuity to cover additional expenses, Rone’s actual testimony does not support this conclusion.

Third, it can be readily inferred from the above-quoted passage of the statement of decision that the court found that “[Rone] testified the only funds she had were in her [Keyport] annuity.” But as noted immediately above and in the discussion under subpart 1, ante, Rone testified that she had funds other than those connected with the Keyport annuity, namely, funds from her real estate ventures she had invested in New York Life prior to the marriage; she referred to this New York Life account at different times in her testimony as another “annuity,” or as her “trust funds.” It is thus plain that Rone did not testify that all of her separate property funds were located in the Keyport annuity.

Fourth, the court’s conclusion that Rone’s purchase of a used van caused a further reduction in “the balance in this [Keyport annuity] account”—thereby undermining Rone’s evidence that there were sufficient funds in the Keyport annuity account in 2002 for the $78,810.75 contribution to the down payment on the Webster home purchase—was without support in the record. There was no evidence that Rone used funds from the Keyport annuity to buy the used van. The only evidence concerning the van purchase was James’s testimony that, “[r]ight after she got her accident,” Rone bought him a used van that cost approximately $3,000. Further, as noted, Rone presented evidence that she held separate property funds other than in the Keyport annuity, namely, in an account with New York Life. Moreover, since James’s testimony was that Rone bought the van “when he came back [home] . . . [in] ’93, ‘94” and the Keyport annuity was not purchased by Rone until April 1996, it was clearly not the source of the funds used to buy the used van.

The trial court’s conclusion that the Keyport annuity was the source of the van purchase and miscellaneous expenditures during the marriage to which Rone testified was not supported by substantial evidence.

3. “It was undisputed that whatever money [Rone] had when the parties married, she lost in the Mar Vista property/sale.”

There was indeed evidence that, because of foundation defects, Rone sold the Mar Vista home at a loss. Rone testified that she lost approximately $90,000, that figure being the difference between her purchase price and the price she received when she sold the home. And she also testified that she invested “a lot” of the cash she received from the sale of the Del Rey Oaks home into the purchase of the Mar Vista home. But she also testified that she invested some of the funds from the sale of the Del Rey Oaks home into “[her] New York Life annuities.” And, as discussed, ante, Rone had established an account with New York Life with separate property funds prior to the marriage. In light of these facts, the court’s conclusion that “whatever money [Rone] had when the parties married, she lost in the Mar Vista property/sale” does not find support in the record, either as a disputed proposition, or, as the court found, as an undisputed one.

4. “[Rone produced evidence of] an investment account [with New York Life Securities], separate and distinct from her annuity. Although held in her name alone, there was no testimony as to when the account opened or the source of these funds. . . . It appears that the parties may, in fact, have had money other than from [Rone’s] annuity. Presumably, this money would have had to have come from money earned by [James] during the course of their marriage.”

Contrary to the court’s conclusion, there was testimony as to when the New York Life account opened and the source of the funds that were used to open it. Rone testified that she had established the New York Life account prior to her accident in 1994, and that it dated back to “the first time [she] had a house on the beach, which was quite a while back.”[13] She explained that “[w]henever [she] had money left over from the sale [of property, she] would put [the funds] in annuities with . . . Bob Sorbel [sic;] he’s a New York Life agent I deal with.”[14] It is thus apparent that the court’s assumption that the New York Life account was established with money earned by James after the parties married was based upon the unsupported premise that there had been no evidence concerning the establishment of the New York Life account.

The court concluded—based upon its view that there had been no explanation concerning the New York Life account in Rone’s name—that “[p]resumably, this money [in the New York Life account] would have had to have come from money earned by [James] during the course of their marriage.” Immediately following this conclusion, the court recited that James had testified that (1) he had given all the money he earned during the marriage to Rone; (2) Rone had handled the marital finances; (3) after Rone’s accident, his work increased and he then earned more money than the couple’s monthly expenses; (4) he understood that Rone had been placing any of his excess earnings into savings; and (5) he understood that the couple’s savings was the source of the Webster home down payment.

James himself admitted that his income during the early years of the marriage—from 1988 to approximately 1996—was not sufficient to provide a surplus after payment of family expenses. He testified that his earnings increased to approximately $600 per week in or about 1996, and that he sometimes earned more than $600 per week. He provided no corroboration concerning those earnings. He testified further that he understood that from the time his earnings increased (approximately 1996) forward, there was extra money that was being saved by Rone.[15] But he did not provide any documents that confirmed this understanding, and he gave no specifics as to the time period in which there were surplus funds, the amount of any surplus funds available during the years the parties were married, or their disposition. Likewise, although he testified he understood that the source of the down payment for the Webster home was the couple’s savings, he presented no specifics concerning the basis for that understanding or documents confirming it.

Additionally, James’s testimony concerning his earnings was inconsistent with the evidence of his reported income. For the relevant years for which he testified there was a surplus of his earnings (1996 through 2001), his Social Security earnings statement showed (1) three years in which there was no reported income whatsoever, (2) that the highest reported earnings were $9,686 in 2000 (which would have resulted in weekly earnings of $186, far less than the $600 per week amount to which he testified), and (3) total reported income for the six years that annualized to $3,436. Thus, his income, as reported to the federal government, was clearly insufficient to satisfy monthly community expenses, let alone furnish a reserve for savings.[16] The court acknowledged this discrepancy between James’s testimony and his reported earnings, stating: “Although [James’s] Social Security earning history does not show significant income, [Rone] testified that [James] was often paid under the table.” Rone, however, did not so testify. It was, in fact, James who testified that “a lot of times [he was paid] under the table.”

There was scant evidence upon which to base a conclusion that James’s 1996‑2001 earnings were sufficient to provide the community savings for the down payment for the Webster home. There was a large discrepancy between the annual income James reported to the government and what he testified at trial he actually received. His reported annual income of $3,436 over the six years would have been insufficient to generate any savings. Although James testified to earnings of $600 per week (or sometimes a greater amount) from 1996 forward, he presented no confirming documentation. Further, even assuming the complete accuracy of James’s testimony concerning his earnings (and disregarding the large discrepancy between that testimony and the Social Security earnings statement), the figures of $600 per week (or $31,200 per year) are hardly suggestive that his earnings would result in significant savings after payment of monthly community expenses. And his testimony that he understood that (1) that Rone was saving some of the weekly money he gave her after paying the community bills, and (2) the source of the down payment for the Webster home was community savings was based upon those generalized statements, without reference to any specific joint savings or checking accounts that may have existed, and was devoid of any specifics or corroboration.

We have conducted a careful review of the entire record, including the evidence presented by Rone concerning the separate property source of the down payment and James’s evidence that its source was community savings. Based upon that review, we conclude that the evidence (presented solely through James’s testimony) that he earned enough money from 1996 to May 2002 to allow for the savings required to make the down payment for the purchase of the Webster home was, at best, extremely weak. It did not constitute “evidence of ponderable legal significance, evidence that is reasonable, credible and of solid value. [Citations.]” (Roddenberry, supra, 44 Cal.App.4th at p. 651.) Likewise, any inference drawn by the court from James’s testimony that he generated sufficient earnings between 1996 to May 2002 to establish community savings of over $78,000 for the purchase of the Webster home was not reasonably based. “[T]he inference [supporting the judgment] must be a reasonable conclusion from the evidence and cannot be based upon suspicion, imagination, speculation, surmise, conjecture or guesswork. [Citation.] Thus, an inference cannot stand if it is unreasonable when viewed in light of the whole record. [Citation.]” (Beck Development Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th 1160, 1204.)

Accordingly, we conclude that there was no substantial evidence to support the trial court’s conclusion that Rone’s separate property was not the source of the $78,810.75 contribution to the down payment on the Webster home purchase. The court thus erred in denying her claim for reimbursement of that amount pursuant to section 2640, subdivision (b).

D. Exclusion of Witness

At the commencement of the trial, at the request of James’s counsel, the court ordered that all witnesses be excluded pursuant to Evidence Code section 777, subdivision (a).[17] After two witnesses had completed their testimony, and following a break during the examination of the third witness, Rone, under Evidence Code section 776, Rone’s counsel advised the court that Michelle, Rone’s daughter, had been present during the proceedings and that she might need to be called as a witness. Upon motion by James’s counsel, the court ruled that Michelle would not be permitted to testify regarding any matters that had previously been covered during the trial. Specifically, the court ruled that Michelle would not be permitted to testify “if it had anything to do with regard to the [Webster home], the condition of the house.”

Rone contends this was error. She argues that Michelle’s testimony “was essential to a full and fair trial,” and that barring her testimony was error in this instance because “neither [Rone’s] trial attorney nor the witness were [sic] at fault.”

As made clear from the use of the permissive language “may” in the statute, the trial court’s determination of whether to exclude witnesses under Evidence Code 777 is within its sound discretion. And the general rule concerning a witness’s violation of an exclusion order is as follows: “[E]ven if a witness violates an exclusion order by attendance at the trial, the violation does not mean that a defendant has been denied a fair trial. The violation also ‘does not render the witness incompetent to testify, and does not furnish grounds to refuse permission to testify, at least where the party who seeks to offer the testimony was not “at fault” in causing the witness’s violation of the exclusion order. [Citations.]’ [Citation.]” (People v. Adams (1993) 19 Cal.App.4th 412, 436 (Adams).)

Here, the record supports the court’s order barring Michelle’s testimony. As Rone’s attorney explained to the court, at the time of the witness exclusion order when the trial commenced, he had not anticipated calling Michelle as a witness. It was only after testimony had proceeded for some time that Rone’s attorney concluded he might require Michelle’s testimony. And in response to the comments of James’s counsel that the witness should not be allowed to testify after she made the decision to remain in the courtroom, Rone’s attorney responded, “It wasn’t her decision. It was mine.” Under these circumstances, the trial court was justified in barring the witness. This is not a case in which “ ‘the party who [sought] to offer the testimony was not “at fault” in causing the witness’s violation of the exclusion order.’ [Citation.]” (Adams, supra, 19 Cal.App.4th 436.) While we ascribe no misconduct toward Rone’s counsel, the record supports the conclusion that he was responsible for Michelle’s having violated the witness exclusion order. It was therefore within the court’s power to bar her testimony.[18]

E. Division of Community Property

Rone lastly contends that the trial court abused its discretion by failing to order an appropriate division of the community property asset, namely, the parties’ 50 percent interest as joint tenants in the Webster home. She asserts that, although the court determined the fair market value of the home, the court failed to “determine the value of a community part-interest in the real property . . . [or] make[] . . .findings regarding which spouse, if any [sic], is best served by retaining part ownership of the house, and on what terms.”

We will not assign error to any failure of the trial court to rule on these matters. Because we conclude that the court erred in denying Rone’s request for reimbursement under Family Code section 2640, subdivision (b), the matter must be remanded to the trial court for further proceedings to enter a specific order granting such request. Upon such remand, it would be appropriate for the court to consider the appropriate disposition of the parties’ community interest in the Webster home. (See § 2556.)

IV. DISPOSITION

The October 25, 2016 statement of decision, insofar as it denied Rone Story’s request for reimbursement of her separate property contribution to the down payment for purchase of the parties’ home on Webster Avenue in Monterey, is reversed. The matter is remanded to the trial court for further proceedings consistent with this opinion.

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BAMATTRE-MANOUKIAN, J.

WE CONCUR:

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ELIA, ACTING P.J.

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MIHARA, J.