9th Circuit Certifies Question of Whether Community Property Presumption Applies to Joint Tenancy Pr
The 9th Circuit has certified questions presented in In re Brace to the California Supreme Court. A bankruptcy court held that California property acquired during marriage by California residents as Joint Tenants was community property under California Family Code section 760, and therefore the entire interest was property of the bankruptcy estate, even though only Mr. Brace filed bankruptcy. The Debtor appealed to the BAP, and the BAP affirmed the bankruptcy court. The Debtor then appealed to the 9th Circuit.
The 9th Circuit has asked the California Supreme Court to decide whether the community property presumption found in Cal. Family Code section 760 trumps title presumption found in California Evidence Code 662 in Chapter 7 bankruptcy cases where debtor and non-debtor spouse acquire title as joint tenants. The certification references the conflict created between the 9th Circuit's decision in in re Summers, 332 F.3d 1240, 1243 (9th Cir. 2003), which held that "the community property presumption was rebutted when a married couple acquires property from a third party as joint tenants" and the California Supreme Court's subsequent decision in In re Valli, 324 P.3d 274 (Cal. 2014), a marital dissolution case that held that the Evidence Code's title presumption does not apply in marital dissolution proceedings when it conflicts with the marital property transmutation statutes.
In certifying the question, the court said "No controlling California precedent addresses the applicability of the community property presumption in suits between a married person and a third party creditor. We recognize that, under California law, statutory interpretation begins with the text. People v. Scott, 324 P.3d 827, 829 (Cal. 2014). But the text of the relevant statutes (and relevant evidentiary codes) is susceptible to both of the opposing interpretations offered by the parties, and we do not find the answer to these issues obvious."