Opinion
G043194
01-13-2012
In re Marriage of DEBORAH K. and JOHN M. RESTAINO, JR. DEBORAH K. RESTAINO, Appellant, v. JOHN M. RESTAINO, JR., Respondent.
Law Offices of Marjorie G. Fuller, Marjorie G. Fuller and Lisa R. McCall for Appellant. Law Offices of Steven E. Briggs and Steven E. Briggs for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Super. Ct. No. 05D001004)
OPINION
Appeal from a judgment of the Superior Court of Orange County, Nancy A. Pollard, Judge. Request to file supplemental reply brief. Judgment affirmed in part, reversed in part, and remanded. Request granted.
Law Offices of Marjorie G. Fuller, Marjorie G. Fuller and Lisa R. McCall for Appellant.
Law Offices of Steven E. Briggs and Steven E. Briggs for Respondent.
Appellant Deborah K. Restaino (wife) appeals from a judgment on reserved issues in a marital dissolution action. She contends the superior court erred in its quantification of the parties' marital standard of living and in its characterization and division of respondent John M. Restaino, Jr.'s (husband) interest in his former law firm. We conclude the first claim lacks merit. However, we further conclude the trial court erred in its construction of the confidential settlement and release terminating husband's interest in his former law firm. Thus, we reverse that portion of the judgment with directions to equally divide between the parties all nonsalary proceeds received by husband under the settlement agreement.
PROCEDURAL BACKGROUND
The parties separated in November 2004, ending their 21-year marriage. In February 2005, wife filed a marital dissolution petition. Shortly thereafter, the parties entered into a stipulation concerning temporary support, a division of the proceeds from the sale of the family home, and the handling of several bank and securities accounts. Without objection, husband obtained a judgment terminating the parties' marital status in July 2006. Husband, an attorney, filed a response to the petition with a schedule of assets that listed his "[e]quity share" in the law firm of Lopez, Hodes, Restaino, Milman & Skikos (Lopez Hodes) as a community asset.
In December 2006, husband filed an order to show cause to modify spousal support. A supporting declaration stated Lopez Hodes was "winding down" "under the supervision of an arbitrator, and that he had "entered into a [confidential] agreement with Lopez Hodes with respect to the termination of my interest." The declaration also stated he was about to begin working with a Colorado law firm.
Before trial, the parties entered into a stipulation whereby each received one-half of a $500,000 distribution from Lopez Hodes's arbitrator "on account of monies due [husband] under the terms of [a] 'confidential agreement'" between the shareholders of Lopez Hodes. The stipulation described the funds received by each party "as a preliminary distribution of community property without prejudice."
In May 2007, the parties executed a stipulation stating husband was "entitled to the payment of certain specified monies" under the confidential agreement relating to the winding down of Lopez Hodes. The stipulation provided "[t]he character of the monies to be paid to [husband] . . . has not yet been determined," and the parties agreed to have one-half of the funds distributed to each party's attorney to be held in interest-bearing bank accounts. Three months later, the parties executed another stipulation declaring each party would receive $625,632.50 of the $750,632.50 held by each party's attorney "as a result of disbursements from Lopez[] Hodes . . . with the [c]ourt to reserve jurisdiction to characterize [the] funds." The parties further agreed the $125,000 balance "will continue to be held by each side, in trust . . . ."
In the same month, husband filed a declaration responding to an order to show cause, stating the confidential agreement negotiated for the winding down of Lopez Hodes was not "a buy-out of shares," because "all parties [agreed] . . . it was neigh impossible to 'value' a pure contingency firm and, therefore, the money would be distributed as it . . . had been in the past; bonuses based upon partnership interest." A later declaration claimed the agreement provided "individuals [would] receive[] various bonus payments as a result of work performed on litigation that had been settled and it was further agreed that these individuals . . . would receive future bonuses based on other matters not yet concluded. [¶] Portions of the funds payable as a result of the terms of this settlement were attributable to my work at the firm prior to . . . separation and portions of these funds were attributable to work performed after the date of separation."
Wife filed a motion in limine to preclude husband from denying his interest in Lopez Hodes was a community asset and introducing evidence to support his separate property claim. After a hearing, the court denied the motion.
In November, husband filed an order to show cause to reduce his spousal support obligation. The court began a hearing on it in February 2008. The hearing was continued to April 1 on which date the court took the matter under submission. Trial on the reserved issues began the next day. It was agreed the evidence presented on husband's order to show cause would be considered as part of the trial evidence.
Trial was held on numerous dates over a period of several months. After one more session in mid-January 2009, the court issued a tentative decision on February 6. The court issued a final statement of decision and entered judgment on the reserved issues on December 3.
The judgment awarded wife monthly spousal support of $6,200 plus 19 percent of husband's "gross monthly earnings, bonuses, commissions, distributions or income over and above" base salary, retroactive to January 1, 2008.
The court also acknowledged husband's interest in Lopez Hodes, the firm's decision to "wind down its business affairs" after the parties separated, and husband's execution of the confidential settlement agreement and release with the firm in December 2006. Its statement of decision noted the court did not admit any parol evidence "regarding the [a]greement" and "interpreted the document on its face . . . ." The court construed the agreement to mean "the sums due [husband] on pending litigation matters . . . were bonuses or compensation due . . . by virtue of [husband's] efforts or work performed either before or after the parties' separation." The sums found to be community property and those assigned to husband as his separate property are discussed more fully below.
The court directed the parties' attorneys to conduct an accounting of the payments received by husband, characterize them as determined by the judgment, and reconcile the sums previously distributed between the parties. The court also ordered counsel to simultaneously conduct an accounting "as to . . . additional payments . . . due [wife] . . . for spousal support."
DISCUSSION
1. The Marital Standard of Living
a. Factual Background
At trial, the following evidence was presented concerning the parties' standard of living.
When the couple married, husband was a licensed podiatrist with his own practice and attending law school. He became an attorney in 1986, but continued operating his medical practice until 1990 when he suffered an injury that left him disabled and unable to maintain it. Husband subsequently received a $1 million lump-sum payment for his disability.
In 1991, husband began working with Lopez Hodes. After he became a shareholder with the firm, the couple purchased a six-bedroom, 8,000- square-foot home in Newport Beach for $1.76 million. Husband testified the parties funded the purchase with the settlement funds he received for his disability. The parties furnished the home with expensive furniture, antiques, and original artwork. They also acquired collections of books, coins, and wine. The home had an exercise room and the parties hired personal trainers, but they also held gym memberships. Wife testified husband customarily gave her expensive jewelry. The couple purchased expensive clothes, entertained and traveled often, and routinely dined at expensive restaurants.
Because of bonuses he received from Lopez Hodes, husband described the parties' income as "[s]poradic" with "good years and . . . very good years." Wife also acknowledged their income "fluctuated by hundreds of thousands." In 2001, husband's wages totaled $331,500, but he received a bonus that resulted in the parties' adjusted gross income exceeding $1.3 million. Husband testified it was later determined he had been overpaid on the bonus and he had to repay the excess portion of it to the firm over time. Husband's 2002 wages amounted to $430,250 and the parties' adjusted gross income was $502,020. In 2003, he received over $1.2 million in wages and the parties' adjusted gross income exceeded $1.6 million.
The judgment incorporated the following findings from the court's statement of decision: (1) The parties had "a long-term marriage"; (2) wife's "educational goals and potential work experience were impeded and delayed by her role as a homemaker raising the parties' two children"; (3) wife "assisted [husband] in maintaining his medical practice" and "the family during [husband's] years . . . obtaining a law degree"; (4) wife "is fifty . . . years old and not in the best of health," which "may be limiting to some degree"; (5) the parties enjoyed "a very high [marital] standard of living," estimated to be "around $250,000 per year"; and (6) husband was employed receiving "a base salary of $17,083.33 per month[] and the potential for bonus[es]," plus substantial payments for his continued work on cases for Lopez Hodes.
b. Analysis
Citing the trial court's quantification of the parties' marital standard of living as "around $250,000 per year," wife contends it constituted an abuse of discretion because the evidence presented at trial supported a much higher figure. Husband argues wife has failed to present all of the relevant evidence on this issue and, in any event, the record supports the trial court's finding on the parties' marital standard of living. In addition, he claims any error in this respect was harmless since wife does not challenge the amount of spousal support awarded to her.
We do not find any prejudicial abuse of discretion. "In a judgment of dissolution of marriage . . ., the court may order a party to pay for the support of the other party an amount, for a period of time, that the court determines is just and reasonable, based on the standard of living established during the marriage, taking into consideration," among other matters, the factors listed in Family Code section 4320. (Fam. Code, § 4330, subd. (a); unless otherwise stated, all further statutory references are to the Family Code.) Section 4320 mentions "[t]he marketable skills of the supported party," including the availability of work, and "the time and expenses required . . . to acquire the appropriate education or training" (§ 4320, subd. (a)(1)), "[t]he extent to which the supported party's present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage . . . to devote time to domestic duties" (§ 4320, subd. (a)(2)), "[t]he extent to which the supported party contributed to the attainment of an education, training, a career position, or a license by the supporting party" (§ 4320, subd. (b)), "[t]he ability of the supporting party to pay spousal support" (§ 4320, subd. (c)), "[t]he obligations and assets, including the separate property, of each party" (§ 4320, subd. (e)), and "[t]he duration of the marriage" (§ 4320, subd. (f)). As summarized above, the trial court's statement of decision reflects it based the spousal support award on these statutory factors.
Wife relies on the language of section 4332. It declares, "In a proceeding for dissolution of marriage . . ., the court shall make specific factual findings with respect to the standard of living during the marriage . . . ." (§ 4332.) Again, the court satisfied this requirement. It described the parties as having a "very high standard of living," which included accumulating book, coin, and wine collections, participating in "sporting activities," use of "a personal trainer[ and] a yoga instructor," and taking vacations commensurate with the parties' upper income status.
This satisfied section 4332. In re Marriage of Smith (1990) 225 Cal.App.3d 469 explained "the Legislature intended the marital standard of living to be what case law has described it to be, that is, reasonable needs commensurate with the parties' general station in life. [Citation.] It is a general description, not intended to specifically spell out or narrowly define a mathematical standard. If the Legislature had intended something more specific, it could have prescribed a more specific measurement, such as the marital standard of living as measured by the gross annual family income. . . . It appears to us that the Legislature intended 'marital standard of living' to be a general description of the station in life the parties had achieved by the date of separation and this is satisfied by the everyday understanding of the term in its ordinary sense, i.e., upper, middle or lower income." (Id. at p. 491.)
In light of the evidence presented at trial, the court's quantification of the standard of living as "around $250,000 per year" appears to be low. But even assuming the court erred in this respect, that finding alone would not support reversal of the spousal support award. "'Marital standard of living' is merely a threshold or reference point against which all of the statutory factors may be weighed. [Citation.] It is neither a floor nor a ceiling for a spousal support award. [Citation.] The Legislature intended 'marital standard of living' to be a general description of the station in life that the parties had achieved by the date of separation. [Citation.]" (In re Marriage of Nelson (2006) 139 Cal.App.4th 1546, 1560.)
In Nelson, the trial court relied on the supported spouse's "current standard of living rather than the marital standard of living" "in setting spousal support . . . ." (In re Marriage of Nelson, supra, 139 Cal.App.4th at p. 1560.) While finding "[t]his analysis . . . erroneous" (ibid.), the appellate court affirmed the award stating "[g]iven that the legal standard, 'marital standard of living,' is a mere general reference point and [the appellant] does not contest the trial court's balancing of the specific statutory factors, we find no abuse of discretion" (ibid.).
The same is true here. The trial court found the parties enjoyed a "very high standard of living." Wife may be correct in arguing the court's quantification of that status was too low, but she does not challenge the support award itself or any of the other factors considered by the court in determining the amount of support she is to receive. No abuse of discretion occurred.
2. Husband's Interest in His Former Law Firm
a. Factual Background
As noted, during the marriage husband worked at Lopez Hodes, eventually becoming a shareholder. When the parties separated, he held an 11.5 percent interest in the firm. Before the firm dissolved, his interest was diluted to 9.7 percent by the admission of additional shareholders. Husband agreed his equity interest in Lopez Hodes was a community asset.
Lopez Hodes was a plaintiff-oriented firm that handled mass tort lawsuits involving the pharmaceutical industry. These cases were generally conducted through multiple district litigation in federal court. Husband's compensation consisted of a monthly salary, plus bonuses. The firm retained clients on a contingency fee basis, but husband maintained time records documenting the hours he worked on assigned matters to assist in calculating the firm's fee award or its proportion of fees distributed to participating law firms from a common benefit fund upon settlement of an action.
In 2005, Lopez Hodes began to encounter financial problems. That year the firm lost over $1.5 million. The shareholders agreed to dissolve the firm under the supervision of an arbitrator. In late 2006, husband signed a confidential settlement and release with Lopez Hodes.
At trial, the agreement was introduced as an exhibit under seal. However, the trial court based its property characterization ruling of the payments husband received under it "on [the] face" of the agreement without considering any parol evidence. In addition, the court referred to the agreement's details in its statement of decision. Thus, we deem it essential to discuss the details of the agreement at length here.
The confidential agreement's recitals declared Lopez Hodes was "in the process of winding down" and would "cease operations . . . upon the conclusion of its existing projects . . . ." The recitals also identified husband as "an employee and a shareholder" of Lopez Hodes, acknowledged "[v]arious claims have been . . . or could have been asserted by and against [husband], [Lopez Hodes] and certain individual shareholders," which the firm and its shareholders agreed to arbitrate "to assist . . . in resolving any and all past, present and future disputes, claims and controversies that concern or affect [husband] and [Lopez Hodes]," and that "[a]ny remaining claims [husband] has or might have against [Lopez Hodes] or any of the individual shareholders . . . are being fully resolved by this [a]greement."
As "consideration [for] the mutual promises and covenants . . . set forth" in the agreement, Lopez Hodes promised to pay husband his salary and benefits through the end of 2006, plus "$20,000 per month [through 2007] as an independent contractor to assist" the firm "in the prosecution of certain existing cases and projects. In addition, subject to the arbitrator's authority to withhold amounts deemed necessary to pay the firm's "working capital needs," such as "debt, firm loans, overhead, salaries and costs," husband was awarded payments from three categories of pharmaceutical litigation: "Zyprexa-1," "Current Receivables," and "Existing Cases."
For Zyprexa-1, the agreement authorized the arbitrator to pay husband $3,340,000, less the outstanding balance of his loan. This payment was described as "compensation for any equity, merit or discretionary bonus due . . . [to husband] on any and all cases or projects resolved and funded prior to the date of this [a]greement" and "from Zyprexa-1, regardless of the date that said recoveries come to [Lopez Hodes]," plus "compensation for any other consideration provided in this [a]greement . . . ." During trial, husband testified his work on litigation involving Zyprexa-1 began in January 2004 and continued through June 2006. He also acknowledged the arbitrator had paid him the Zyprexa-1 funds in two installments, one received in 2006 and the second in 2007. However, the final accountings for this category had not been completed as of the time of trial.
The receivables category awarded husband a specified percentage from anticipated common benefit distributions for litigation involving Fen/Phen and Rezulin. These sums were described as "bonus compensation only." Husband admitted his work on both the Fen/Phen and the Rezulin matters were completed before the parties separated in December 2004.
The third category, existing cases and projects, awarded husband a percentage of the firm's "net attorney's fees" received from litigation involving Vioxx and Ortho Evra, plus a percentage of any common benefit distribution received from litigation described as Zyprexa-2. Husband testified his participation in the Vioxx and Ortho Evra matters began in 2005, while he commenced work on Zyprexa-2 in December 2004. In addition, husband acknowledged he worked on other drug litigation at Lopez Hodes for which he was not compensated under the confidential settlement agreement.
Paragraph I.E. of the agreement declared husband's employee and independent contractor salaries, plus the distributions awarded to him from the foregoing categories of existing cases and projects "represent the full and final compensation in whatever form that [husband] is entitled to receive from [Lopez Hodes]," and "that effective January 1, 2007, [husband] shall have no further ownership interest in any of the [firm's] shares . . . ."
In its statement of decision, the trial court declared it "interpreted the" confidential settlement agreement "on its face, and on its 'four corners.'" Nonetheless, the court agreed with husband's construction of the settlement, finding "the sums due [husband] on pending litigation matters, pursuant to the [c]onfidential [s]ettlement [a]greement, were bonuses or compensation due . . ., directly or indirectly, by virtue of [husband's] efforts or work performed either before or after the parties' separation." It ruled the monies involving Fen Phen and Rezulin were community property to be divided equally between the parties. As for Zyprexa-1, the court characterized the payments as "5% community property and 95% separate property of [husband]." Finally, payments husband received on cases involving Vioxx, Ortho-Evra, and Zyprexa-2 were deemed his separate property.
b. Analysis
On appeal, wife contends the settlement agreement entered into by Lopez Hodes's partners "does not control on the question of community interest." Thus, she argues the trial court erred by denying her motion in limine to preclude husband from presenting, at trial, evidence of his separate property interest in the postseparation payments he received from Lopez Hodes, and by relying on the terms of the settlement agreement to characterize husband's interest in that firm.
As for the ruling on wife's motion in limine, we find no error. "'"The usual purpose of motions in limine is to preclude the presentation of evidence deemed inadmissible and prejudicial by the moving party."' [Citation.] . . . As rulings on the admissibility of evidence, they are subject to review on appeal for abuse of discretion. [Citations.]" (Mardirossian & Associates, Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 268-269.)
Husband always acknowledged his interest in Lopez Hodes was a community asset. But he argued the shareholders had agreed it was impossible to place a value on the firm as a whole and, instead agreed to distribute any remaining net fees from ongoing litigation as bonuses based on a partner's work on the case. In this respect, husband merely claimed much of the consideration received by him related to his postseparation work. (§ 771, subd. (a) ["The earnings and accumulations of a spouse . . . while living separate and apart from the other spouse, are the separate property of the spouse"].) Assuming the correctness of husband's construction of the settlement agreement, his testimony and time records were relevant to a determination of when he performed the work for which he received payments.
Wife cites a letter husband sent the arbitrator, which she argues was an effort to enlist the arbitrator in structuring the settlement agreement "to stave off [her] discovery of the [community interest] value . . . in Lopez Hodes." The trial court apparently rejected this interpretation of the evidence. Further, there was evidence husband informed wife and her attorney about the settlement negotiations, provided them with a copy of the proposed agreement, and allowed them to meet with the arbitrator. Wife has failed to show the trial court's implicit findings are unsupported as a matter of law. (In re Marriage of Dellaria & Blickman-Dellaria (2009) 172 Cal.App.4th 196, 201 ["Factual findings are upheld if supported by substantial evidence"].)
Alternatively, wife argues husband's "only evidence that there was no community interest in [Lopez Hodes] was his reliance on the settlement agreement." She acknowledges "[p]rofessional practices are difficult assets to value for purposes of property division and marital actions, . . . [but contends] that does not mean the value does not exist." Consequently, wife claims the trial court had a duty to value it.
We conclude the trial court erred by construing the confidential settlement agreement and release as merely distributing husband's compensation for his continued handling of some of the firm's ongoing case work. Generally, "all property . . . acquired by a married person during the marriage while domiciled in this state is community property." (§ 760.) Husband joined Lopez Hodes and became one of its shareholders during the parties' marriage. At the time of separation, he admittedly held an equity interest in the law firm. Thus, as between husband and wife, this interest constituted a community asset. (Kenworthy v. Hadden (1978) 87 Cal.App.3d 696, 701.)
On appeal, a family law court's characterization of assets as either a community property or separate property is subject to independent review because it presents "a mixed question of fact and law . . . ." (In re Marriage of Foley (2010) 189 Cal.App.4th 521, 526; see § 2550.) In addition, the trial court determined the extent of the parties' community interest in Lopez Hodes based solely on the terms of the confidential settlement and release between husband, the arbitrator, and the firm's other shareholders. "The interpretation of a written instrument . . . is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect," and "[i]t is therefore solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence. Accordingly, '[a]n appellate court is not bound by a construction of the contract based solely upon the terms of the written instrument . . . .' [Citations.]" (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866, fn. omitted; see also Winet v. Price (1992) 4 Cal.App.4th 1159, 1166 [applying rule to a release].) Thus, we review the trial court's interpretation of the confidential settlement and release de novo.
Case law has recognized that "'[i]n determining the value of a law practice or interest therein, the trial court should'" consider several factors, including "'(a) fixed assets, which we deem to include cash, furniture, equipment, supplies and law library; (b) other assets, including properly aged accounts receivable, costs advanced with due regard for their collectability; work in progress partially completed but not billed as a receivable, and work completed but not billed; (c) goodwill of the practitioner in his law business as a going concern; and (d) liabilities of the practitioner related to his business.' [Citation.]" (In re Marriage of Kilbourne (1991) 232 Cal.App.3d 1518, 1522.) Merely because Lopez Hodes took cases on a contingency fee basis did not preclude valuation of husband's interest in it. (Id. at p. 1524, fn. 5.) But, "[w]hile the [foregoing] guidelines . . . are generally applicable, the particular circumstances of each case, and each professional practice, will vary and call for different methods of valuation." (In re Marriage of Iredale, Cates (2004) 121 Cal.App.4th 321, 328.)
In some circumstances an agreement between members of a law firm concerning the nature of their interest in the firm can affect a family law court's characterization of a spouse's interest upon dissolution of his or her marriage. In In re Marriage of Nichols (1994) 27 Cal.App.4th 661, after marriage, husband joined a law firm, signing a stock purchase agreement that excluded accounts receivable and work in progress in calculating his interest in the firm. Eight years later, the parties divorced. The wife's expert's valuation of husband's partnership interest included the accounts receivable and work in progress, while husband's expert valued his interest under the terms of the stock purchase agreement. The trial court agreed with the husband's approach. The wife appealed, challenging the use of the stock purchase agreement to value the husband's partnership interest.
The appellate court affirmed. "In assessing whether to use a formula set forth in a buy-sell agreement, the trial court should consider (1) the proximity of the date of the agreement to the date of separation to ensure that the agreement was not entered into in contemplation of marital dissolution; (2) the existence of an independent motive for entering into the buy-sell agreement, such as a desire to protect all partners against the effect of a partnership dissolution; and (3) whether the value resulting from the agreement's purchase price formula is similar to the value produced by other approaches. [Citation.]" (In re Marriage of Nichols, supra, 27 Cal.App.4th at p. 672.)
Here, when the parties separated, husband concededly had an equity interest in Lopez Hodes. But there was no prior agreement concerning the scope of each shareholder's interest in the firm. A spouse's interest in a law firm is "an enforceable contractual right to receive payments upon his . . . withdrawal from the firm," and this "right to withdraw with payments cannot be defeated or diminished without his agreement and it is therefore a valuable property right." (In re Marriage of Fonstein (1976) 17 Cal.3d 738, 746; see also § 1100, subds. (b) & (d) [spouse with management and control of a community property interest in a business cannot dispose of interest "for less than fair and reasonable value" without other spouse's consent].) The confidential settlement and release concerning husband's rights as a shareholder was crafted after he and wife separated and wife filed this marital dissolution action. Merely because husband agreed to alter the manner in which he would receive payment of his equity interest should not affect wife's right to her portion of it.
When interpreting a written agreement, "[t]he whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other." (Civ. Code, § 1641; see also In re Marriage of Lund (2009) 174 Cal.App.4th 40, 51-52.) The trial court narrowly focused on the nature of the litigation employed to compensate husband and characterized the payments based on when he worked on these cases. But husband acknowledged these cases were not the only matters he handled while a member of Lopez Hodes. Furthermore, the confidential agreement expressly acknowledged it was prepared and executed in light of the firm's dissolution. It also included provisions declaring the settlement was intended to resolve all claims between husband, the firm, and the firm's other shareholders. The sums awarded to husband for his work on Zyprexa-1 are even described in part as a return of his "equity" in the firm. In addition, the confidential settlement declared the payments made to husband under the agreement were intended to result in the elimination of his shareholder interest.
There was evidence Lopez Hodes was in debt when the firm dissolved. Nonetheless, the firm had assets, including ongoing cases, that would subsequently provide income to it. In fact, husband admitted at trial that he had already been paid the sums awarded to him for the Zyprexa-1 litigation.
The firm members and the arbitrator apparently crafted the confidential settlement so that shareholders would continue to work on specific cases still being serviced by the firm until those matters were completed. While it is true some of this litigation arose after separation, to the extent husband agreed to continue working on cases in return for a portion of the fees earned on those matters, considering the agreement as a whole, we construe the nonsalary and independent contractor payments as a quantification of his interest in the firm. Thus, except for the sums designated as husband's postseparation salary and independent contractor compensation, the payments awarded to him under the confidential settlement and release constitute his equity interest in Lopez Hodes and the trial court erred in characterizing these sums based on when husband began work on each case.
3. Wife's Request to File a Supplemental Reply Brief
After briefing had been completed and this matter had been set for oral argument, wife filed a request to submit a supplemental brief discussing this court's recent decision in In re Marriage of Prentis-Margulis & Margulis (2011) 198 Cal.App.4th 1252. There we held "[i]n a marital dissolution proceeding to divide the community property, where the nonmanaging spouse has prima facie evidence that community assets of a certain value have disappeared while in the control of the managing spouse post-separation, . . . the managing spouse ha[s] the burden of proof to account for the missing assets." (Id. at p. 1257, fn. omitted.)
We granted the request and afforded husband an opportunity to file a supplemental brief, limited "to the issue of the applicability, if any," of Prentis-Margulis & Margulis. Husband timely filed a brief, but in part he attached a document from the trial record in a companion appeal (Restaino v. Des Jardins, G044386) to support a claim the trial court had effectively complied with the Prentis-Margulis & Margulis decision in this case.
Wife has now filed a request to file a supplemental reply brief together with a proposed supplemental reply brief to respond to husband's argument. We grant her request.
Nevertheless, we conclude that the supplemental briefs dealing with Prentis-Margulis & Margulis are not particularly relevant to any of the issues herein.
DISPOSITION
Appellant's proposed supplemental reply brief is ordered filed. The judgment is affirmed as to the finding on the parties' marital standard of living. The judgment is reversed as to the ruling on the extent of respondent's interest in his former law firm and the matter is remanded to the superior court for further proceedings consistent with this opinion. The parties shall bear their own costs and attorney fees on appeal.
RYLAARSDAM, ACTING P. J.
WE CONCUR:
O'LEARY, J.
IKOLA, J.