## Facts

- Valerie Jean Devlin (wife) and Brian James Devlin (husband) married in July 1975.
- Before the parties’ first separation in May 1977, husband suffered severe injuries in an automobile accident and became a paraplegic.
- The parties reconciled before any final dissolution judgment, remained together until May 1981, and wife later filed for dissolution.
- After reconciliation, husband received personal injury damages totaling at least $175,000.
- At the time of the later separation, all personal injury proceeds had been spent, and all existing community property had been purchased with those proceeds.
- The principal assets were equity in real property and a mobilehome used as the family residence; the mobilehome was specially equipped for husband’s disability.
- The trial court found the community property traceable to the personal injury proceeds and awarded most property (realty and mobilehome) to husband, giving wife miscellaneous personal property to assist her in restarting.
- Wife appealed the property division.

## Issues

1. Whether the trial court erred by awarding most community property to husband because it was acquired with husband’s personal injury proceeds.
2. Whether property acquired by converting personal injury proceeds into other assets remains subject to the statutory distribution rules for community personal injury damages when the proceeds are traceable.
3. Whether the trial court abused its discretion under the “interests of justice” standard in former Civil Code § 4800(c).

## Decision

- The Court of Appeal affirmed.
- The court held that former Civil Code § 4800(c) creates a preference to assign community personal injury damages to the injured spouse at dissolution unless the interests of justice require a different disposition.
- The court rejected the argument that personal injury proceeds lose their special statutory treatment when converted into other property, so long as the proceeds and resulting assets are clearly traceable and not indistinguishably commingled.
- Given husband’s paraplegia, the specially adapted residence, and the fact that all property was traceable to personal injury damages, the award of the bulk of the property to husband was within the trial court’s discretion.

## Legal Principles

- Personal injury damages arising during marriage are community property, but former Civil Code § 4800(c) provides a distinct disposition rule at dissolution.
- Under former Civil Code § 4800(c), community personal injury damages are assigned to the injured spouse unless, based on the facts, the interests of justice require another allocation.
- If the court allocates such damages between spouses under the interests-of-justice standard, it must assign at least one-half to the injured spouse and may assign the remainder in proportions the court finds fair.
- The statutory treatment applies not only to the damages in cash form but also to assets acquired with those proceeds when tracing shows the assets derive from the personal injury recovery.
- Commingling defeats special treatment only when it destroys traceability; when tracing is established, the trial court may treat the derived property as representing community personal injury damages for distribution purposes.

## Conclusion

The court upheld a property division awarding most community assets to the injured spouse where the assets were traceable to personal injury proceeds and the trial court reasonably concluded that the interests of justice favored assigning the bulk of those proceeds-derived assets to the paraplegic husband under former Civil Code § 4800(c).


In re Marriage of Devlin, 138 Cal. App. 3d 804 (Cal. Ct. App. 1982)