MALMQUIST VS. MALMQUIST (DIVORCE PROPERTY & ALIMONY)

Statutes cited

Key holdings

Practitioner summary

Rose, J. The Court adopted, with one modification, the apportionment method of In re Marriage of Moore, 618 P.2d 208 (Cal. 1980), for determining separate and community interests in the appreciation of a residence acquired with a separate-property loan before marriage. A presumptive approach was chosen to avoid disparate outcomes for similarly situated litigants, without abrogating the just-and-equitable division rule of McNabney v. McNabney, 105 Nev. 652, 782 P.2d 1291 (1989). The community's pro rata appreciation share equals community principal reduction divided by the contract purchase price, multiplied by total appreciation; the Court modified Moore (following Moldave, 70 Cal. L. Rev. 1263) to credit the outstanding loan balance according to the number of routine monthly payments made from each estate, not to the original obligor, and set out the SP/CP formulae. The purchase price means the contract purchase price only, excluding the buyout of a former spouse's interest and the cost of improvements. Improvements are apportioned separately: once an owner commingles separate funds with community funds, the owner bears the burden of rebutting the community presumption by direct tracing or the exhaustion method, Lucini v. Lucini, 97 Nev. 213, 626 P.2d 269 (1981). The stipulation alone did not satisfy the tracing burden as a matter of law (the bank records were not in the appellate record), so the greenhouse was properly classified community. Community (or separate) property improvements to the other estate's property are generally measured by simple reimbursement without interest, adopting the rules of Cal. Civ. Code section 4800.2; a court may deviate where the appreciation is almost exclusively attributable to the improvements. The Court affirmed the balance of the judgment: district courts have broad discretion over debt division, Johnson v. Steel, Inc., 94 Nev. 483, 581 P.2d 860 (1978); a court may order maximum child support and set the residence aside for the children, Stojanovich v. Stojanovich, 86 Nev. 789, 476 P.2d 950 (1970); and the medical practice, found entirely community, could be valued by any legitimate method accounting for past earnings, Ford v. Ford, 105 Nev. 672, 782 P.2d 1304 (1989).

In plain language

Kenneth (a physician) and Nancy Malmquist divorced after a seventeen-year marriage. The central issue was how to divide the family home, which Kenneth had bought before the marriage but which the couple paid down and improved during the marriage. This is the case that gives Nevada its formula for splitting a home when both separate and community money went into it. Kenneth bought the home in 1967 for $36,500 with a $2,500 down payment and a mortgage. During the marriage, community funds reduced the mortgage, and the couple added a $25,000 kitchen and a $37,707 greenhouse. By divorce the home was worth $215,000. The Nevada Supreme Court adopted (with one change) the California 'Moore' method for apportioning the appreciation of a home between separate and community property, giving each a share in proportion to how much it paid toward the purchase price. The Court's modification, borrowed from a law-review proposal, credits the unpaid loan balance based on the number of routine monthly payments each estate made, not on who originally took out the loan. Improvements are handled separately: normally the estate that paid for an improvement is simply reimbursed its cost, without interest. The Court affirmed that the greenhouse - paid from a commingled joint account - was community property, because Kenneth's stipulation alone did not trace the money to his separate funds. It also upheld ordering Kenneth to pay the entire equity-line debt, to pay maximum child support while the home was set aside for the children, and the valuation of his medical practice's goodwill.