## Facts

- Jane Holder Geraci and John J. Geraci married in 1983 and separated in 2000; dissolution proceedings began in 2001.
- John bought a Manhattan Beach property in 1973 (before the marriage) and rebuilt the home in 1980; the parties lived there from 1980 through the marriage.
- During the marriage, the parties refinanced or obtained equity financing on the residence multiple times.
- In 2000, the parties sold the residence for $974,000, yielding about $354,000 in net proceeds, which they divided before dissolution (Jane about $159,000; John about $194,000).
- John sought reimbursement of his alleged separate-property interest in the residence sale proceeds, claiming the property was worth about $400,000 at marriage and asserting he should keep the full net proceeds.
- The trial court found the spouses formed a general business partnership and treated John’s post-separation earnings from the alleged partnership as community property.
- The trial court awarded spousal support to Jane and imposed sanctions requiring John to pay all community debts and contribute to Jane’s attorney’s fees, based on alleged breaches of partnership and spousal fiduciary duties.

## Issues

1. Whether substantial evidence supported a finding that the spouses formed a general partnership, justifying characterization of John’s post-separation earnings as community property.
2. Whether sanctions and fee orders premised on breach of partnership fiduciary duties could stand absent proof of a partnership relationship.
3. Whether the spousal support order was supported by adequate evidence and required findings.
4. Whether John proved entitlement to reimbursement of a separate-property interest in the residence sale proceeds.

## Decision

- The court reversed the finding that a general partnership existed and, consequently, reversed the characterization of John’s post-separation earnings as community property.
- The court reversed sanctions and attorney-fee orders to the extent they rested on breach of partnership fiduciary duties and remanded for reconsideration consistent with the absence of a partnership finding.
- The court reversed the spousal support order and remanded for further proceedings because the order lacked adequate evidentiary support and findings.
- The court affirmed the denial of John’s claim for reimbursement of a separate-property interest in the residence sale proceeds.
- Disposition: affirmed in part, reversed in part, and remanded with directions.

## Legal Principles

- A general partnership requires evidence of an actual agreement and conduct establishing a business enterprise distinct from the marital relationship; conclusory or equivocal evidence is insufficient.
- Post-separation earnings are not treated as community property on a partnership theory unless a valid partnership relationship is proved and supports that characterization.
- Sanctions based on breach of partnership fiduciary duties cannot be sustained without a legally and factually supported partnership finding; on remand, the trial court must reassess sanctions under any remaining valid theory.
- Spousal support orders must rest on adequately developed evidence and articulated findings sufficient to permit appellate review.
- A spouse seeking separate-property reimbursement bears the burden of proving the separate interest and amount; failure to prove equity or traceable separate contributions supports denial of reimbursement and permits enforcement of a prior division of sale proceeds.

## Conclusion

The appellate court rejected the trial court’s partnership-based treatment of post-separation earnings and related sanctions, and required reconsideration of spousal support due to inadequate evidentiary support and findings, while upholding the denial of the husband’s reimbursement claim for the residence proceeds because he failed to carry his burden of proof.


In re Marriage of Geraci, 51 Cal. Rptr. 3d 234 (Cal. Ct. App. 2006)