## Facts

- Jerome H. Frick (husband) owned and operated the Mikado Hotel and Restaurant; he acquired full ownership during dissolution proceedings with a prior spouse.
- Jerome and Hiroko U. Frick (wife) married in 1971 and separated in 1982.
- The principal assets in the dissolution were the Mikado business and the underlying real property in Sherman Oaks, California.
- The trial court found the Mikado business, real property, and related interests remained Jerome’s separate property and rejected an alleged oral transmutation agreement.
- During marriage, Jerome devoted full-time labor to the enterprise, and community and separate funds were commingled in ways that complicated tracing.
- The trial court applied Pereira to apportion the business’s increase in value and applied a Marsden-type calculation to recognize a community interest in the real property due to community contributions.
- Other disputed items included a Datsun automobile (alleged gift vs. community asset), a loan used to pay property taxes, allocation of business income between separate and community, spousal support (including a set termination of jurisdiction), and attorney’s fees.

## Issues

1. Whether the trial court correctly characterized the Mikado business and real property as Jerome’s separate property and properly apportioned community interests using Pereira and Marsden.
2. Whether the evidence and findings adequately supported the trial court’s tracing and apportionment calculations, given commingling.
3. Whether the Datsun automobile was Hiroko’s separate property by gift or a community asset.
4. How responsibility for the property-tax loan should be allocated between the community and Jerome’s separate estate.
5. Whether the trial court properly calculated community income attributable to the business.
6. Whether the trial court properly terminated jurisdiction over spousal support after a fixed period.
7. Whether the attorney’s fee orders should stand in light of the property and support rulings.

## Decision

- The Court of Appeal affirmed in part and reversed in part, remanding for further proceedings.
- It upheld the core characterization that the Mikado real property and business were Jerome’s separate property and approved using Pereira (business) and Marsden (real property) to recognize community claims.
- It reversed and remanded portions of the judgment involving specific property and accounting determinations, including the Datsun, aspects of the property-tax loan allocation, and aspects of the community-income computations.
- It reversed and remanded the order terminating jurisdiction over spousal support, requiring reconsideration of whether a fixed termination date was justified.
- It left attorney’s fee rulings generally intact but permitted reconsideration to the extent affected by corrected property and support determinations.

## Legal Principles

- Separate property does not become community property absent a valid transmutation; commingling alone does not transmute, but it can defeat tracing and affect apportionment.
- When a separate-property business increases in value primarily due to a spouse’s labor during marriage, Pereira supports allocating a reasonable return on separate capital to the separate estate and treating the excess as community.
- When community funds are used to reduce principal debt or otherwise contribute to separate real property, the community may receive a proportional equitable interest in the property and related appreciation (Marsden methodology).
- Apportionment findings must be supported by substantial evidence and sufficiently explained, particularly where commingled funds require tracing.
- A court should be cautious in setting a fixed termination of spousal-support jurisdiction when the supported spouse’s future self-support is uncertain; retaining jurisdiction may be required to address future changes in circumstances.

## Conclusion

The appellate court approved treating the Mikado business and real property as the husband’s separate property while allocating community interests through Pereira and Marsden, but it required renewed findings and calculations on disputed assets, debts, and income allocations, and it rejected a fixed cutoff of spousal-support jurisdiction without adequate assurance of the supported spouse’s future financial independence.


In re Marriage of Frick, 181 Cal. App. 3d 997, 226 Cal. Rptr. 766 (Ct. App. 1986)