Opinion
D079966
01-22-2024
GARY SHIFREN, Appellant, v. ROBYN SHIFREN, Appellant.
Niddrie Addams Fuller Singh and Rupa G. Singh for Appellant Gary Shifren. Bickford Blado & Botros and Andrew J. Botros for Appellant Robyn Shifren.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. 18FL001905C Sharon L. Kalemkiarian, Judge. Affirmed.
Niddrie Addams Fuller Singh and Rupa G. Singh for Appellant Gary Shifren.
Bickford Blado & Botros and Andrew J. Botros for Appellant Robyn Shifren.
HUFFMAN, ACTING P. J.
This case involves the application of South African matrimonial law to a premarital agreement (called an antenuptial contract (ANC) in South Africa) executed by plaintiff Gary Shifren (Gary) and defendant Robyn Shifren (Robyn) about a week before they married in 2000 in what used to be their home country. The default matrimonial property regime in South Africa is known as "community of property," in which all assets the prospective spouses had before marriage, as well as assets they acquire during marriage, become part of a joint estate that is divided equally when their marriage is dissolved either by divorce or death. (Yarbrough, South Africa's Wedding Jitters: Consolidation, Abolition, or Proliferation? (2006) 18 Yale J. of Law &Feminism 497, 514-515, fns. 103 &104.) Prospective spouses, however, may opt out of community of property and agree in a prenuptial contract to an optional South African matrimonial regime called the "accrual system."
Under the accrual system, prospective spouses retain their own antenuptial and postnuptial assets and liabilities. (See Marumoagae, The Beginning of the End: Dissolution of Marriage Under Accrual System (2015) De Rebus, p. 2 <https://www.derebus.org.za/the-beginning-of-the-end-dissolution-of-marriage-under-accrual-system/> [as of January 22, 2024], archived at <https://perma.cc/FLD5-7WZ4> (hereafter Marumoagae).) When the marriage is dissolved under the accrual system," 'the spouse whose estate shows no accrual or a smaller accrual than the estate of the other spouse . . . acquires a claim against the other spouse or his [or her] estate for an amount equal to half of the difference.'" (Marumoagae, at p. 4, quoting the South African Matrimonial Property Act No. 88 of 1984 § 3(1) (MPA).) As particularly relevant here, parties may list their separate assets in an antenuptial agreement that will be excluded from accrual. Also excluded are assets acquired "by virtue of" such excluded assets. (Marumoagae, at p. 4, citing MPA, § 4(1)(b)(ii).)
Gary and Robyn opted out of community of property and adopted the accrual system in their validly executed ANC. Gary excluded from accrual his "member's interest and/or loan account[s]" of five companies he owned before his marriage to Robyn. Gary, while residing in California, ended up selling the tangible assets of the companies at auction in South Africa during a "fire sale," after he and his family fled South Africa due to a violent home invasion robbery. Gary eventually used what he describes as "several resourceful strategies" to transfer some of these assets to the United States, where he alleges he used a portion to start Interio, LLC (Interio USA), and later ChemxWorks, Inc. (ChemxWorks). The couple separated in September 2017 and their divorce became final in November 2018.
A dispute arose between the parties over the division of their assets governed by the ANC, and specifically, whether ChemxWorks was excluded from Gary's accrual estate. After a multi-day hearing, the trial court issued a statement of decision (SOD) and judgment, finding under South African law that Robyn's accrual claim against Gary included an equal share of ChemxWorks, based on the court's additional finding that the assets from the fire sale belonged to the South African companies and not Gary; and that he, in any event, was unable to establish the requisite "clear nexus" between the assets from the fire sale and/or loan accounts of his South African businesses and Interio USA/ChemxWorks.
On appeal, Gary seeks reversal of the judgment, arguing the trial court's interpretation of the ANC is flawed, and the assets he used to form Interio USA, the predecessor to ChemxWorks, were traceable to his South African businesses and thus excluded from the accrual regime. He therefore argues the court erred in including ChemxWorks in his accrual estate. He also raises other arguments including the court erred in valuing ChemxWorks as of the date of divorce and in awarding Robyn permanent spousal support.
Robyn, in her (protective) cross-appeal, contends that, if the property division of the judgment and the award of permanent spousal support are reversed, the matter should be remanded for the trial court to reconsider its support award and its decision not to award her attorney fees.
As we explain, we independently conclude that the assets from the fire sale belonged to Gary's companies and not Gary individually as a shareholder, inasmuch as he did not sell his "member's interest" in the fire sale; and that substantial evidence supports the trial court's findings (1) that, even if the fire sale proceeds were excluded, there was not a "clear nexus" between those proceeds and the two businesses he formed while living in California; and (2) that the amount of money Gary received on a "loan account" from one of his South African companies could not be determined with any accuracy as of the date of commencement of the marriage. We therefore conclude the court did not err in awarding Robyn half of ChemxWorks' valuation in determining the accrual of each party's estates.
Moreover, we conclude the court properly exercised its discretion when it relied on a court-appointed neutral expert in valuing ChemxWorks and that its valuation is supported by substantial evidence; and when it awarded Robyn permanent spousal support. We thus affirm the judgment. In light of our affirmance, we deem Robyn's (protective) cross-appeal moot.
FACTUAL AND PROCEDURAL BACKGROUND
Gary and Robyn met in 1997 and married on December 31, 2000. They had a son together, R., born in 2001. Robyn also had two children from a previous marriage. Their divorce became final on November 17, 2018.
A. Antenuptial Assets
Before they married, both Gary and Robyn had established businesses. Between about 1990 and 1999, Gary founded five companies in South Africa involved in the design, manufacture, and sale of furniture and related products. Gary initially was the sole "shareholder" or "member" of the five companies identified as: 1) Placebo Designs CC (Placebo Designs), which owned an 80,000 square foot factory containing equipment and machines used to make furniture; 2) Kido Designs, which owned a residence Gary remodeled to use as a showroom for his furniture; 3) Interio CC, a furniture retail location; 4) Interio Springfield, another furniture retail location; and 5) Interio Pretoria, also a retail location (these five companies are sometimes collectively referred to as the South African Companies and the three Interio companies as Interio SA). At some point Gary's father invested money in Placebo Designs and became a 10 percent owner.
"CC" in South Africa means "Close Corporation."
Gary estimated in 1999 he had about 60 employees working for him across all companies; and collectively his businesses were worth about $1.2 million (U.S.) dollars. Gary also had obtained two patents, one owned by Placebo Designs and the other by him personally.
Unless otherwise noted, all dollar amounts in this opinion refer to U.S. dollars and not the Rand, South Africa's currency.
After completing school, Robyn became a professional ballerina and performed in South Africa, London, and around the world until July 1989, when she suffered major injuries in a car accident. While touring, Robyn met her first husband. They married in 1988, had two sons, separated in about 1996, and subsequently divorced. After the divorce, Robyn worked full-time in her father's store, where they developed a cosmetic business called Ascot Agencies Limited (Ascot). Robyn was busy running Ascot when she met Gary in December 1997, and the couple moved in together about a year later.
B. The Family Is Forced to Leave South Africa
About 10 days before their wedding, Gary and Robyn, along with Robyn's two sons, were victims of a home invasion and armed robbery by a South African gang. Robyn at the time was about four months pregnant with the couple's son R. The family escaped unharmed but Gary ended up killing the gang leader in self-defense, which led to threats on his life from the remaining gang members. The family promptly moved to a house owned by Robyn's father, which the couple had been remodeling and had intended to occupy. After other concerning incidents including a break-in at Gary's factory and the killing of a police officer outside of Gary's offices, the couple decided to leave South Africa, ultimately choosing to relocate in Southern California, where they had family.
Gary initially traveled by himself to Southern California in early October 2001, with the intention of returning to South Africa. However, once in California he decided it was unsafe to return. Because Gary left South Africa "in a real hurry," he did not have an opportunity to gather certain items including bank records and other documents.
C. Gary Sells the Assets of the South African Companies but Not His Member's Interests
Once in California, Gary attempted to sell his South African Companies "as a going concern" but could not find a buyer. Instead, he sold the businesses' "hard assets" "piecemeal" at an auction in mid-November 2001. This included machinery, fixtures, furniture, and inventory. With his father's assistance, Gary was able to transport some smaller pieces of equipment to the United States at the end of 2022. Gary testified that none of the "intellectual property" of the South African Companies was sold, such as "drawings and spreadsheets" that he had created over the years to design and manufacture furniture. Nor did he sell his "membership interest" in any of the five companies. Gary estimated the fire sale generated about $140,000.
In his trial brief and at trial, Gary represented the fire sale generated $194,625, the figure adopted by the trial court.
Gary in April 2002 sold the South African property used as a showroom by Kido Designs. The sale price was equal to the amount of the mortgage. Gary made the sale under duress because of his family's then "precarious" financial situation.
D. The ANC
A few days after the home invasion incident, the parties executed the ANC, opting out of the community of property matrimonial system and adopting the accrual system set forth in section 1 of the MPA. According to the lengthy report of the court-appointed South African family law expert Adele de Wet (de Wet Report), under the accrual system "both parties retain their own antenuptial as well as post nuptial assets and liabilities"; the "right to share in the accrual of the estate of the other party only arises on the date upon which the marriage is dissolved"; and the "claim sounds in money and no claim lies against the other spouse for specific assets." (De Wet Report, ¶ 24.2, pp. 25-26.)
The parties adopted the opinions of Advocate de Wet "with regard to the issues identified in her report."
"The accrual system was designed to protect the spouse whose estate during the marriage could not grow substantially the same as compared to that of his or her spouse[,] thus allowing a spouse with a smaller estate to claim a share in his or her spouse's estate, which showed greater or substantial growth." (Marumoagae, supra, at p. 5.) The parties agreed the ANC was valid and controlled the division of their marital assets under South African law.
The parties identified certain assets in the ANC that were excluded from accrual. As relevant to this appeal, paragraph 8.2 of the ANC excluded Gary's "member's interest and/or loan account" in the South African Companies but not the income from the companies; and paragraph 8.3 excluded among other assets the "shares and/or loan account" Robyn owned in Ascot "but not the income derived therefrom."
Paragraph 8.2 in part provides: "The member's interest and/or loan account owned by Gary Shifren in Placebo Designs CC, Kido Designs CC, Interio CC, Interio Springfield CC, Interio Pretoria CC and/or other assets which have come into or may hereafter come into the ownership of Gary Shifren by reason of the possession or ownership or former possession or ownership of the aforesaid member's interest and/or loan account, but not the income derived therefrom . . .[,] shall be specifically excluded and shall not form part of the accrual of his estate." (Italics added.)
Paragraph 8.2. is patterned after section 4(1)(b) of the MPA, which provides in part: "In the determination of the accrual of the estate of a spouse- [¶] . . . [¶] (ii) an asset which has been excluded from the accrual system in terms of the antenuptial contract of the spouses, as well as any other asset which he [or she] acquired by virtue of his [or her] possession or former possession of the first-mentioned asset, is not taken into account as part of that estate at the commencement or the dissolution of his [or her] marriage." Gary acknowledges on appeal that the "main disputed issue" in this case involves the interpretation of paragraph 8.2 of the ANC.
E. Gary's New Businesses
Gary received the proceeds from the fire sale in two installments.
Because South Africa limits the amount of money that can be taken out of the country, Gary testified he developed "creative" ways to access the money. For example, he loaned some money to Garveni Creations (Garveni), a South African business owned and operated by his father and brother. Garveni in return agreed to repay the loan through an "offshore account in England" held by Gary's father. Family members also brought some of the proceeds from the fire sale with them, as allowed by South African law, when they visited the United States.
About a month after the fire sale, Gary was offered a job paying $50,000 a year. Although the income he earned was insufficient to support his family, Gary took the job and started working in January 2002. As time went on, Gary also used proceeds from the fire sale and the "surrender value" of various life insurance policies for living expenses.
Once in California, Gary connected with Liz Muller (Muller). She offered Gary a contract to manufacture fixtures she used in her business of remodeling grocery stores. Gary used the "templates" from his South African Companies to price out and manufacture the fixtures. He denied that the money he earned from this contract funded Interio USA, as Robyn claimed. Instead, he testified he used a portion of the fire sale proceeds to "capitalize Interio [USA]."
Interio USA was founded in October 2003. Gary initially was its only "member" or shareholder. A lawyer advised Gary that, although he could apply for a visa through Interio USA, as sole owner of the business it was unlikely immigration would approve his application. As a result, a few months after its founding Gary asked his then brother-in-law Brett Grauman (Brett) to be a 51 percent owner of Interio USA in name only, with Gary owning the remaining 49 percent. Brett agreed. Other than being a 51 percent owner, Gary testified that Brett had no involvement with Interio USA, including its "operational management." At a later point, Brett, and his wife Benita Grauman (Benita), became 100 percent owners in Interio USA, although Gary continued to run the business.
Gary and the Graumans agreed that any money earned by Interio USA would "flow through" Brett and Benita for distribution as "gifts" to Gary and his family. With Gary's permission, the Graumans used a portion of Interio USA's earnings to pay for their daughter's school tuition and company taxes. This seven-plus-year arrangement lasted until the middle of 2011, when Gary and the Graumans entered into a buy/sell agreement in which Gary gifted them $10,000 "to thank them for helping," and they in return transferred their ownership interest in Interio USA to Gary. By then Gary's immigration status had been resolved.
Gary, through Interio USA, worked with Muller to remodel grocery stores until about 2008. As that business began winding down, Gary looked for other opportunities. One arose through a South African friend who had started a "soak tank business" in the United States called Hyginix that specialized in cleaning "kitchen equipment." In 2005, Gary, through Interio USA, "loaned" Hyginix $295,000 in return for stock in the company.
Gary's relationship with Hyginix ended in December 2010. A dispute subsequently arose regarding the nature of his interest in Hyginix that culminated in litigation. The Graumans also became involved in the litigation because Interio USA's tax returns listed them as owners of the business. Ultimately the case settled for $367,000. Gary testified he reinvested the Hyginix settlement money in Interio USA.
At trial, Gary contended the Hyginix proceeds were excluded from his accrual estate, and because he used those proceeds in part to fund ChemxWorks, that created a sufficient nexus to exclude that asset as well. Relying on the experts' testimony that "damages" from a lawsuit are "patrimonial losses" and thus not excluded, the trial court found this contention "not persuasive."
During the litigation with Hyginix, Gary purchased a "tank" for his own soak tank business and began "reverse engineering" the chemical used in this process. Gary at some point entered into a partnership to develop this business, which they named "ChemxWorks" after his partner refused to have the company operate under the "Interio" name. They "registered" ChemxWorks in 2012 and the company "started" its business using the products Interio USA had spent "hundreds of thousands of dollars developing." Not long thereafter Gary's partner left the business. Because Gary had already done all the "marketing" under the ChemxWorks name, he decided it was "too difficult" to return the business to Interio USA. At the time of trial, Gary was no longer conducting any business through Interio USA.
Gary estimated he spent about $60,000 to start Interio USA. Some of this money came from the repayment of the loan he had made to Garveni from the fire sale proceeds, through his father's offshore account in England. Gary accessed this money in about August 2003, after it had been wired into a joint bank account he held with Robyn.
At trial, Gary contended he also funded Interio USA in part through allegedly excluded funds he received from his father-in-law, resulting from a loan Placebo Designs had made during a home remodel. Because Gary had "abandoned" Placebo Designs after moving to the United States, Gary's father-in-law paid the money directly to Gary. For "brevity and space concerns," Gary has not raised this issue on appeal.
F. The Dissolution Action
Gary and Robyn separated in September 2017. Their son R. at the time was 16 years old. Initially the couple tried to resolve their disputes through mediation, and, when unsuccessful, Gary filed a petition for dissolution of marriage in February 2018. The parties eventually reached agreement regarding interim custody of R., visitation, and temporary child and spousal support among other issues. They also agreed to jointly retain a neutral forensic accountant, Tony Yip (Yip), to determine the value of Gary's business interests and the income available for support.
On October 26, 2018, the trial court entered a dissolution-only judgment declaring the marriage terminated as of November 17, 2018.
G. The Trial, Resulting SOD, and Judgment on Reserved Issues
The trial in this case was conducted over six days, involved three financial experts and four experts on South African law, and included over 800 exhibits, some of which were thousands of pages. The trial court issued its tentative SOD on July 6, 2021. Gary lodged 75 objections to the tentative. The court in response issued its final SOD on August 31, which was incorporated into the judgment entered on October 21, 2021.
The trial court noted the "central inquiry" in this case was "whether ChemxWorks, the successful business currently operated and 100% owned by Gary[,] is an asset that should be excluded from his accrued estate. Gary argues that it should, as he believes he can establish the 'connecting thread' to the assets excluded at marriage. The legal experts all agreed that the burden to establish the 'connecting thread' necessary to exclude the asset is Gary's burden under South African law."
At trial, Gary's expert, Brian Brinig (Brinig), testified the "net accrual or increase" to Gary's estate for his and Robyn's nearly 18-year marriage was $9,652, "when you remove the [excluded] assets of Chemx[Works] and Interio [USA]." As for Robyn, Brinig testified her "includable assets . . . at the date of divorce [were] $268,489." Because under the accrual system "each party gets half of the other party's accrual," doing the math Brinig calculated the "net result" was Robyn owed Gary $129,000 "because her estate has grown by $258,000 more than Gary's has grown. That's the difference between the $9,600 on Gary's line and the $268,000 on Robyn's line."
The trial court ruled the proceeds from the November 15, 2001 "fire sale" were not excluded from the accrual system. In so doing, the court relied on the "specific language" of the ANC, noting paragraph 8.2 of the ANC (quoted ante) was "very specific as to what assets were excluded: the member's interest and or loan account owned by Gary Shifren in [the South African Companies], and assets which he may own thereafter by reason of his ownership interests or loan account." The court found the proceeds from the fire sale, which Gary sought to connect to his businesses in California (i.e., Interio USA/ChemxWorks), were neither "proceeds of the sale of his membership interest, nor were they proceeds that belonged to him." The court also found that, even if the assets from the fire sale were excluded from accrual, Gary's evidence was insufficient to establish a "clear nexus" or "connecting thread" between those assets and Interio USA/ChemxWorks.
The trial court next valued ChemxWorks, relying on the report and testimony of expert Yip, and set that value at $2,116,000 as of November 17, 2018, the date the parties' marriage was dissolved. The court conducted "accrual calculations" and valued Gary's (includable) estate at $2,411,629 and Robyn's at $192,435, resulting in a court-ordered equalization payment to Robyn of $1,104,543. After accounting for an increase to Gary's estate for a 2018 tax return, half of which belonged to Robyn, and making an offset for a $70,000 discovery sanction against Robyn, the court found Gary owed Robyn a "net equalization payment" of $1,065,302, and ordered Gary to make that payment in four installments over 24 months.
The trial court also adopted Yip's analysis as to the parties' respective incomes; ordered counsel of the parties to "meet and confer" regarding child support arrears Gary owed for 2018 and 2019 up until the date of R.'s emancipation; and ordered Gary to pay Robyn retroactive temporary spousal support and permanent spousal support.
DISCUSSION
I. Exclusion of Interio USA/ChemxWorks
A. Governing Law
At the commencement of trial, the court and the parties discussed the law applicable to the interpretation of the ANC. Gary's counsel recognized that South African law was "persuasive" but "[did] not bind this Court"; that it was Gary's burden or "onus" to establish, under a "balancing of probabilities" standard, whether his California businesses were excluded from his accrual estate; and that per Advocate de Wet, under South African law Gary could satisfy his burden with credible oral testimony.
The trial court noted the "balancing of probabilities" standard under South African law was not much, if at all, different from our preponderance of the evidence; that it would be applying California rules of evidence; that it had read the various reports of the experts regarding South Africa's accrual law and found it helpful, but in the end it was up to the court to apply the facts to the law and decide the issues, without regard as to "how a South African judge would decide these facts"; that it recognized under South African case law that oral testimony alone could satisfy Gary's burden in this case but, "like [it] would in any case," the court would determine "how reliable" Gary's testimony would be based on his "memory or from his recollection"; that this case presented "factual issues" and it would "weigh" the evidence and resolve those issues; and that in deciding these factual issues, it had "enough flexibility," as a result of it being a court of "equity" and "fairness," to determine whether Gary "will have met his sufficient nexus as to the excludable assets, and whether he will have met his onus to establish that probable inference that he needs to apply."
Advocate de Wet's Report included a series of cases from South Africa addressing the accrual system including section 4(1)(b)(ii) of the MPA regarding the exclusion of assets "by virtue of" an asset identified in an antenuptial contract. We have reviewed this law and will apply it as best as we are able. However, like the trial court, we too have some "flexibility" in deciding this case, including applying California law when necessary, as we have conducted no independent research on South African law but instead have relied on the authorities submitted by the various experts.
Gary's retained expert, Ros Rosenberg, also prepared a report that included hundreds of pages of legal authority, mostly from South Africa. Some of these cases were the same as those attached to the de Wet Report.
B. Rules of Interpretation and the Accrual System
Under California law, the" 'fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties.' [Citations.] . . . 'If contractual language is clear and explicit, it governs.' [Citation.]" (State of California v. Continental Ins. Co. (2012) 55 Cal.4th 186, 195 (Continental).)
Under South African law, the rules regarding interpretation of contracts are similar, but not identical, to California law. Under both sets of laws, the courts interpret contracts based on the mutual intention of the parties at the time of contracting. In California," '"' "[s]uch intent is to be inferred, if possible, solely from the written provisions of the contract." '" '" (City of Chula Vista v. Stephenshaw (2023) 91 Cal.App.5th 352, 364, italics added; Continental, supra, 55 Cal.4th at p. 195 [same].)
However under South African law, such intent takes into account "all the circumstances surrounding the contract to determine what [the parties'] intention was in concluding it . . .[,] and that a court should always consider the factual matrix in which the contract is concluded - the context - to determine the parties' intention." (Novartis v. Maphil 2016 (1) SA 518 (SCA) at 11 (South Africa); id. at 12 ["A court must examine all the facts . . . whether or not the words of the contract are ambiguous or lack clarity. Words without context mean nothing"].)
As noted, the parties stipulated to the opinions of neutral expert de Wet regarding the meaning of "certain terms and concepts in an antenuptial contract entered into . . . under South African law." De Wet's opinions provide meaningful guidance to our interpretation of the ANC and paragraph 8.2 in particular.
De Wet opined that the parties' ANC subjected them to the accrual system in which "each retain their separate antenuptial estates and neither party has a claim against the other for any assets of the other party acquired during the marriage" (De Wet Report, ¶ 14); that under section 4(1)(a) of the MPA, the accrual of the estate of a spouse is defined as the "amount by which the net[ ] value of such estate at the dissolution of the marriage exceeds the net[ ] value of such estate at the commencement of the marriage" (De Wet Report, ¶ 38); that section 4(1)(b)(ii) provides for both contractual and statutory exclusions from the accrual system; that a contractual exclusion is "any asset which has been excluded from the accrual system in terms of the [antenuptial contract] entered into between the parties"; and that a general statutory exclusion is "any asset which a party acquired by virtue of his or her possession or former possession of a contractually excluded asset." (De Wet Report, ¶¶ 39.2, 39.3, italics added.) De Wet noted Gary and Robyn in paragraphs 8.2 and 8.3 respectively, invoked both the contractual and statutory exclusions of section 4(1)(b)(ii). (De Wet Report, ¶¶ 43.2, 43.3.)
We, like the trial court, conclude that the phrase "by virtue of" in section 4(1)(b)(ii) of the MPA has the same meaning as the phrase "by reason of" in paragraph 8.2 of the ANC.
Section 6 of the MPA determines the "commencement value" of a spouse's estate under the accrual system. Because neither Gary nor Robyn declared a commencement value, de Wet opined under section 6(4) of the MPA that value "is deemed to be nil" (De Wet Report, ¶ 47; MPA, § 6(4)), leaving open the possibility of establishing that value at a later date. She further opined that a spouse acquires the right to claim an accrual in the estate of the other spouse at the dissolution of the marriage "and not before," citing AB v. JB 2016 (5) SA 211 (SCA) at 216D-217A (South Africa) (De Wet Report, ¶ 51, fn. 22); and that under section 3(1) of the MPA, an accrual claim is for money only and "neither party ever has a claim against the assets of the other party." (De Wet Report, ¶ 52, fn. 24.)
Section 6(4) of the MPA provides: "The net value of the estate of a spouse at the commencement of his marriage is deemed to be nil if- "(a) the liabilities of that spouse exceed his assets at such commencement; "(b) that value was not declared in his antenuptial contract or in a statement in terms of subsection (1) and the contrary is not proved."
Regarding the contractual exclusion in section 4(1)(b)(ii) substantially adopted by Gary in paragraph 8.2 of the ANC, de Wet opined that the party who contends that certain assets are excluded from the accrual "bears the onus to prove the nature and quantum of the assets excluded by their antenuptial contract" (De Wet Report, ¶ 67); that the Supreme Court of Appeal of South Africa in REM v. VM 2017 (3) SA 371 (SCA) (South Africa) (REM) interpreted section 4(1)(b)(ii) of the MPA, and in particular its "by virtue of" language, to "refer[ ] to the particular asset identified in the [antenuptial contract] and excluded therein, [and] its proceeds and assets which replaced the excluded asset or were acquired with its proceeds"; and that "[t]here must be a clear nexus between the asset held and excluded in the [antenuptial contract] and the assets held as at the date of dissolution of the marriage." (De Wet Report, ¶ 68, italics added.)
De Wet opined that "income derived from the ownership or possession of the excluded assets, or any other asset acquired as a consequence of using the income generated by an excluded asset, is not excluded"; that the provisions of section 4(1)(b)(ii) of the MPA "are not widely interpreted to include the exclusion of assets acquired as a consequence of the activities of or involvement in a business of an excluded asset"; that "[i]n short, the assets that may be acquired as a consequence of income generated by being involved in a business, a close corporation or a company, being the excluded asset, are not excluded"; and that the "replacement asset or an additional asset acquired as a consequence of the former possession of the asset, on disposition thereof, or by virtue of dividends being declared whilst such party still possess the interest in the business, the member's interest or shares in the company[,] will be excluded." (De Wet Report, ¶¶ 71, 72.)
C. South African Corporation Law
Advocate Ian Green (Green), appointed by the trial court as an expert on South African corporation law, prepared a report and supplemental report (collectively Green Report). He opined that a "Close Corporation ('the Corporation') is a juristic person which is regulated by the Close Corporations Act No[.] 69 of 1984 ('the [Corporation] Act'). The individuals who are the equivalent of shareholders of a typical limited liability company are referred to as 'Members', and they hold a 'Member[']s Interest' in the Corporation which is expressed as a percentage. Generally only natural persons are entitled to be Members of a Corporation." (Green Report, ¶ 6, fn. omitted.)
According to Green, a Corporation is "typically used by smaller businesses and individuals," and the "low level of complexity" required to operate the Corporation "allows its members to adopt a less formal, and less rigid, approach to running the Corporation." (Green Report, ¶10.) He noted, however, the provisions of the Corporation Act "always remain mandatory." (Ibid., italics added.) Of importance here, under the Corporation Act a Corporation "is a separate juristic person, distinct from its Members, and subject to the provisions of the [Corporation] Act" (id., ¶ 14); and therefore, the Corporation "will continue to exist notwithstanding changes in its membership until deregistration or dissolution" (ibid.).
Further relying on the Corporation Act, Green opined that a Corporation has the "capacity, and powers, of a natural person of full capacity so far as a juristic person is capable of having such a capacity or exercising such powers" (Green Report, ¶ 15); that a Corporation's members are not liable for the Corporation's liabilities and obligations "merely by reason of their membership" (id., ¶ 16); and that incorporation of a Corporation in South Africa "involves the registration of the Founding Statement which must be signed by, or on behalf of, every person who is to become a Member upon its registration," which registration includes particulars about the Corporation including its address, the name and identity of each member, the size of the member's interest, the name of the accounting officer of the Corporation, and the date of the Corporation's financial year-end among other details (id., at ¶ 18).
Because a Corporation is a "separate juristic person, any income due to it will be the property of the Corporation, and any assets purchased by it will belong to the Corporation." (Green Report, ¶ 22.) Citing to the Corporation Act, Green added that with certain exceptions, "[p]ayments to members of the Corporation by reason only of their membership may be made by a Corporation only if, after the payment is made, the Corporation remains solvent and liquid." (Id., at ¶ 23.) In addition, the separateness of a Corporation means it "owns its own property," and therefore "the property of the Corporation cannot be dealt with by a Member as if it were his or her personal property." (Id., at ¶ 25.)
Green also addressed the issue of the liquidation of a Corporation's assets, which results in the "generation of cash." (Green Report, ¶ 33.) He opined that in such situations, the "proceeds of the sale of the Corporation's assets would be for the benefit to the Corporation which could then have the election to distribute those proceeds to its Members subject to the solvency and liquidity requirements." (Id., ¶ 34.) He further opined that, because a Corporation is a separate juristic person "capable of owning assets in its own right," members of that Corporation "do not have the right to own or possess the assets of the Corporation," although it is "possible" that the members and the Corporation may enter into an agreement "entitling a Member to possess the assets of the Corporation." (Id., ¶¶ 35, 36.) Even so, Green noted that "the provisions of the [Corporation] Act always remain binding." (Id., ¶ 25, italics added.)
Regarding the payment of taxes, Green opined that a Corporation and not its members would be liable for payment of taxes including on income and capital gains from the sale of assets. (Green Report, ¶¶ 40, 41.) And, if the "Corporation makes a distribution to the Members of the proceeds received from the sale of assets, the distribution will be taxable in the hands of the Member." (Id., ¶ 42.1.) In addition, if the member sells his or her "Members Interest," the "proceeds from the sale of the Members Interest will be taxable in the hands of the Member." (Id., ¶ 42.2.) Typically, after the "winding up" of a Corporation voluntarily initiated by the members, it is during the "winding up process that the proprietary aspects related to a Corporation's assets will be dealt with." (Id., ¶ 46.)
D. Member's Interest
1. Fire Sale Proceeds
We find the decision in BF v. RF 2019 (4) SA 145 (GJ) (South Africa), included as an attachment to the reports of experts de Wet and Rosenberg, provides meaningful guidance in this case. There, the court analyzed under section 4.1(1)(b)(ii) of the MPA an antenuptial contract that included the following clause:" 'That the assets of the Husband which are listed hereunder and all liabilities presently associated therewith[,] or any other asset acquired by the Husband by virtue of his possession or former possession of such asset[,] shall not be taken into account as part of the Husband's Estate at either the commencement or dissolution of the marriage. [¶] 4.1 All shares and loan accounts in Rand Building Hydraulic (Pty) Ltd [RBH]. [¶] 4.2. All shares and loan accounts in National Re Investments (Pty) Ltd [NRI].'" (BF v. RF, supra, at 146-147.)
At the commencement of marriage, the husband possessed 220 of 1000 "issued shares" in RBH "plus a credit balance loan account," and a beneficial ownership of 21 of 100 shares in NRI and also a "credit balance loan account." (BF v. RF, supra, (4) SA 145 (GJ) at 147.) There was no dispute that under clauses 4.1 and 4.2 of the parties' prenuptial agreement, these original shares and loan accounts were excluded from the accrual of the husband's estate. However at the dissolution of marriage, the husband possessed the "entire shareholdings" in RBH and NRI in addition to "credit balance loan account[s] greater than initially." (Ibid.) The issue thus became whether the additional shares and credit balance loan accounts "over and above what the husband possessed at the commencement [of marriage were] also excluded[.]" (Ibid.)
In a split decision, the majority in BF v. RF held the additional shares and amounts above the original credit balance loan accounts were not excluded under section 4(1)(b)(ii) of the MPA. (BF v. RF, supra, (4) SA 145 (GJ) at 147.) The majority interpreted the words" 'the assets of the Husband which are listed hereunder'" to "only mean assets that he . . . possessed . . . at the commencement of marriage" (id. at 148); and that the phrases in the subordinate clauses 4.1 and 4.2 "do not and cannot contemplate assets yet to be acquired," inasmuch as the "word 'all' must be understood to mean 'all of the husband's shares, etc[.,'] not 'all the shares in the company'" (ibid.). The majority concluded, "what was excluded from the accrual were the existing assets of the husband, as defined, being all of his interest that he possessed in the two companies as at the commencement of the marriage." (Ibid., italics added.)
The majority in BF v. RF also concluded that a married couple could not, under section 4(1)(b)(ii), "have both an accrual during the marriage and exclude wealth or assets acquired by either of them in the future - ie during the marriage. There is only one moment at which any asset of a spouse can be excluded and that is at the commencement of the marriage. Section 4(1)(b)(ii) allows no other act or timing of exclusion." (BF v. RF, supra, (4) SA 145 (GJ) at 151.) The majority noted that, while an asset that does not exist at the commencement of marriage can be excluded" 'by virtue of his [or her] possession or former possession of the first-mentioned asset,'" the additional shares sought to be excluded by husband did not "derive from the consequence of the growth of the initial assets," emphasizing that "each share is an asset and the companies, per se, in which the shares exist are not assets of the husband." (Id. at 152.)
The majority added, "If the husband sought to justify the acquisition of the additional shareholding as having been the fruits of the initial shareholding, it was incumbent on him to allege that, which would have precipitated a forensic enquiry to decide a disputed fact[.]" (BF v. RF, supra, (4) SA 145 (GJ) at 152.) It concluded that it would "make a nonsense of the accrual system if assets in respect of which no rights existed at the commencement of the marriage could be excluded in anticipation of acquisition in the future. A potential spouse could, on this thesis, exclude everything he [or she] would acquire in future and produce a hollow 'accrual.'" (Ibid., italics omitted.)
Finally, of additional significance to our case, the majority in BF v. RF recognized that section 4(1)(b)(ii) "is cast as a deviation from the general accrual regime, and does so within a limited scope, ie you exclude assets rather than specify what assets are included. A strict interpretation of what is excluded would in such a context be warranted and consistent with the onus to prove an exclusion." (BF v. RF, supra, (4) SA 145 (GJ) at 153, final italics added.)
Here, paragraph 8.2 excludes from accrual Gary's "member's interest" in the South African Companies. In fact, paragraph 8.2 makes this point twice: "[t]he member's interest . . . owned by" Gary in the South African Companies "and/or other assets which have come into or may hereafter come into the ownership of Gary Shifren by reason of the possession or ownership or former possession or ownership of the aforesaid member's interest . . ., but not the income derived therefrom ...." (Italics added.)
We note section 4(1)(b)(ii) of the MPA uses the term "asset" and not "member's interest" as provided in paragraph 8.2 of the ANC: "In the determination of the accrual of the estate of a spouse [¶] . . . [¶] (ii) an asset which has been excluded from the accrual system in terms of the antenuptial contract of the spouses, as well as any other asset which he acquired by virtue of his possession or former possession of the first-mentioned asset, is not taken into account as part of that estate at the commencement or the dissolution of his [or her] marriage." (Italics added.)
It is undisputed that the "asset" Gary sought to exclude from the accrual system was his member's interest in the South African Companies, and not the assets of these Companies. As Advocate Green noted, a Close Corporation is a separate juristic entity from its members, and the assets owned by a Close Corporation belong to it and not the members, an opinion shared by both Advocate de Wet as well as Robyn's expert Melanie Feinstein. Green also noted that, "[a]s such[,] the property of the Corporation cannot be dealt with by a Member as if it were his or her personal property." We also note that Gary did not "deregister" or wind-up the South African Companies until 2006 and 2007, years after the fire sale.
The trial court found that the fire sale in November 2001 involved the sale of tangible assets of the South African Companies, such as their equipment, inventory, real property, and fixtures, netting the respective companies about $194,625; that the assets sold at the fire sale belonged to the South African Companies, as separate juristic entities, and not Gary, per the Corporation Act; and that over time, Gary managed, through what the trial court found was a "variety of financial transaction strategies," to transfer some of these company assets to the United States "for his use" and not for the companies' use. (Italics added.)
We therefore independently conclude the trial court's interpretation of paragraph 8.2 is correct, that we adopt that interpretation as our own, and that the court's application of the facts to paragraph 8.2 is supported by substantial evidence. (See Brown v. Watt (1967) 256 Cal.App.2d 44, 48 [noting whether facts come within the meaning of a contract term is a question of fact]; Board of Administration v. Wilson (1997) 52 Cal.App.4th 1109, 1128 [observing that if the trial court correctly construed the contract, its application of the contract language to the facts is essentially a factual inquiry, which we review for substantial evidence].)
BF v. RF supports our conclusion in the instant case. As noted, it looked to the specific asset, "as defined," that was excluded at the commencement of marriage-the husband's ownership of 220 shares in RBH and the 21 shares in NRI, plus the value of the credit balances of the loan accounts from the two companies. (BF v. RF, supra, (4) SA 145 (GJ) at 148.) The majority recognized each of these shares and loan accounts were an "asset" under clause 4 of the parties' antenuptial agreement; and that, because clause 4 and section 4(1)(b)(ii) of the MPA sought to exclude, as opposed to include, assets from the accrual system, a "strict interpretation" of what assets were excluded was warranted. (BF v. RF, supra, at 153.)
In interpreting a document under South African law, "consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production." (Natal Joint Municipal Pension Fund v. Endumeni Municipality 2012 (4) SA 593 (SCA) (South Africa).) Similarly, in California the "language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity." (Civ. Code, § 1638.) Quite simply, if Gary had wanted to exclude the assets of the South African Companies from his accrual estate, it was incumbent on him to specify as much in the ANC.
Based on the "clear and explicit" language (see Civ. Code, § 1638) of the assets, "as defined" (see BF v. RF, supra, (4) SA 145 (GJ) at 148) in paragraph 8.2 of the ANC-Gary's "member's interest and/or loan account[s]"; and applying, as we must, a "strict interpretation" to paragraph 8.2 (see id. at 153); we conclude that only Gary's "member's interest and/or loan account" are excluded from the accrual of his estate, and not the proceeds from the fire sale that belonged to the South African Companies.
Gary claims that such a construction of paragraph 8.2 is "hyper-technical[ ]" and fails to account for the circumstances that led to his family's emigration to the United States. However, South African case law is clear that we must apply a "strict" construction when interpreting an exclusion and specifically focus on the asset that was excluded, which in this case was Gary's "member's interest" in the South African Companies, in contrast to the assets that belonged to the "legally separate entit[ies]." (See BF v. RF, supra, (4) SA 145 (GJ) at 153.)
As for the circumstances that led to the fire sale, while we, like the trial court, certainly appreciate the trauma Gary and his family must have experienced from the home-invasion robbery, which led the family to relocate to the United States and Gary to sell the tangible assets of the South African Companies, for purposes of the contractual exclusion under section 4(1)(b)(ii) of the MPA, we must consider the assets as they existed at the commencement of the marriage, in this case on December 31, 2000, and not when the fire sale occurred almost a year later. (See BF v. RF, supra, (4) SA 145 (GJ) at 148.)
2. "By Reason of"
Even if the fire sale assets were excluded from the accrual of Gary's estate, we nonetheless would conclude Gary's ownership of Interio USA/ChemxWorks was not "by reason of" his ownership of such assets. As noted, the trial court found Gary did not establish the requisite "clear nexus" between such assets and Interio USA. Our analysis on this issue is guided in part by REM.
In REM, the court considered the meaning of the language "any other asset" in section 4(1)(b)(ii) of the MPA. Briefly, the appellant husband and respondent wife in REM had been married and divorced three times. (REM, supra, (3) SA 371 (SCA) at 373.) As relevant here, the husband claimed that the trust assets in question were excluded from the accrual of his estate "by virtue of" the exclusion of the listed VIP trust asset in the parties' antenuptial contract. (Id. at 376-377.) The husband claimed that, because at the time of marriage he was involved in the timeshare business and the VIP trust - (i.e., Vacation Investment Portfolio trust) was excluded, so too should the assets of the trusts in question, which were generated by "his activities in the timeshare industry." (Id. at 377.) The clause in the parties' antenuptial contract relevant to the VIP trust excluded "[a] beneficial interest in [the VIP trust] and/or any other trust conducting business in the vacation time share property market." (Id. at 376.)
In rejecting the husband's contention, the REM court found the clause listing the husband's excluded assets was incapable of "such a wide meaning," as it "only provide[d] for the exclusion of the appellant's beneficial interest in the VIP Trust, together with any asset acquired by virtue of his possession, or former possession of this asset." (REM, supra, (3) SA 371 (SCA) at 377.) The court noted husband provided "[n]o evidence . . . to show any nexus between the assets held by the trusts in question and the assets held by the VIP Trust, at the time of the marriage." (Ibid.) In interpreting the meaning of the phrase "by virtue of" in section 4(1)(b)(ii) of the MPA, the court stated what was "envisaged is 'the particular asset, its proceeds, and assets which replace the excluded asset or are acquired with its proceeds.'" (Ibid.)
Gary claims he proffered sufficient evidence to establish a "clear nexus" between the fire sale proceeds and Interio USA/ChemxWorks. However, because he had the "onus" or burden of proof to make such a showing (see BF v. RF, supra, (4) SA 145 (GJ) at 153), and because the trial court, as fact finder, determined he did not carry his burden, on appeal"' "it is misleading to characterize the failure-of-proof issue as whether substantial evidence supports the judgment." [Citations.] Instead, "where the issue on appeal turns on a failure of proof at trial, the question for a reviewing court becomes whether the evidence compels a finding in favor of the appellant as a matter of law." [Citation.] Specifically, we ask[,] "whether the appellant's evidence was (1) 'uncontradicted and unimpeached' and (2) 'of such character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.'"' [Citation.] This is 'an onerous standard' [citation] and one that is 'almost impossible' for a losing [party] to meet, because unless the trier of fact made specific factual findings in favor of the losing [party], we presume the trier of fact concluded that '[the party's] evidence lacks sufficient weight and credibility to carry the burden of proof.'" (Estes v. Eaton Corp. (2020) 51 Cal.App.5th 636, 651 (Estes), citing Ajaxo, Inc. v. E*Trade Financial Corp. (2020) 48 Cal.App.5th 129, 163-164 and Bookout v. State of California ex rel. Dept. of Transportation (2010) 186 Cal.App.4th 1478, 1486.)
Here, the evidence does not compel a finding of a "clear nexus" between the fire sale proceeds and Interio USA/ChemxWorks. (See Estes, supra, 51 Cal.App.5th at p. 651; De Wet Report, ¶ 68.) Gary testified Placebo Designs used a portion of the fire sale proceeds to loan Garveni 330,000 Rand, the money, $30,000, was paid back to him in August 2003, and he used that money to form Interio USA. However, the trial court found "[t]here was no evidence presented as to what the source of those funds were that were transferred to Garveni"; that there were three transfers from Placebo Designs to Garveni that predated the November 2001 fire sale; and that, excluding the three transfers, the total transfers to Garveni ($58,577) did "not come [c]lose" to the amount realized by the South African Companies from the fire sale ($194,625).
The trial court also noted that when the money was received in August 2003, it came from an offshore account, although the court was "not sure whose account this is, but Gary claims these are repayments from Garveni"; that the money was deposited into Gary and Robyn's joint bank account; and that the incoming wire transfer notice identified the beneficiaries as Gary and Robyn Shifren. Although Gary claimed he used this money to fund Interio USA, the court found that, because the funds were deposited for the benefit of both parties and the couple was short on earnings, the $30,000 deposited into the joint account could have been spent on living expenses with Interio USA being funded from Gary's income (which is never excluded under the accrual regime). (See de Wet Report, ¶ 71 ["It must be noted that income derived from the ownership or possession of the excluded assets, or any other asset acquired as a consequence of using the income generated by an excluded asset, is not excluded."].)
In ruling Gary had not shown a "clear nexus" between the fire-sale proceeds and the $30,000 he and Robyn received in August 2003, during a period in which the family was in a "precarious" financial situation, the trial court did "not find that in this instance his oral testimony establishes a probability that these funds were from the fire-sale."
Gary on appeal nonetheless argues he proffered sufficient evidence under South African law to establish the requisite nexus between the firesale proceeds and Interio USA/ChemxWorks. We disagree.
First, for him to succeed on appeal he must show as a matter of law that such a nexus or "connecting thread" existed. (See Estes, supra, 51 Cal.App.5th at p. 651.) We conclude on this record he cannot make such a showing.
Second, Gary's argument is simply a request of this court to reweigh the evidence and make a new finding favorable to him. However, at a bench trial, the trial court is the sole judge of witness credibility and may disregard the testimony, contradicted or uncontradicted, of any witness if there is any rational ground for doing so. (Schmidt v. Superior Court (2020) 44 Cal.App.5th 570, 582 (Schmidt).)
In sum, we conclude the trial court did not act arbitrarily in disregarding Gary's testimony regarding the source of funds he used to form Interio USA, given the "creative" means he used to move money out of South Africa, all while supporting his family in a new home on a limited income. We thus conclude the trial court did not err in finding that, even if the firesale proceeds were excluded, there was no "clear nexus" between those proceeds and Interio USA/ChemxWorks. (See Schmidt, supra, 44 Cal.App.5th at p. 582; accord, Paterno v. State of California (1999) 74 Cal.App.4th 68, 102 [recognizing an appeal is not a "retrial" of the case or an opportunity for an appellant to rehash arguments about the strength of the evidence]; Hunter v. Schultz (1966) 240 Cal.App.2d 24, 33-34 [as trier of fact, the trial court is" 'the exclusive judge of the credit and weight to be given to the testimony of a witness'" and was free to" 'reject such testimony even though uncontradicted and unimpeached,'" as long as it did not act arbitrarily].)
E. Loan Account
According to Advocate de Wet, a "[l]oan account" is either an "asset" or "liability" depending on whether the loan is made by the corporate entity to a person (including a member) or vice versa.
Gary also contends the trial court erred when it found he presented insufficient evidence of the value of a loan account allegedly owned by Placebo Designs, as of the date of commencement of marriage. (See Advocate de Wet's Report, ¶ 60 ["Section 4(1)(b)(iii) of the [MPA] provides for an adaptation of the net[ ] value of an estate at the commencement of the marriage having regard to the difference which may exist in the value of money at the commencement of the marriage by comparison to the value of money at the dissolution of the marriage."].) For Gary to succeed on appeal, he must make this showing as a matter of law. (See Estes, supra, 51 Cal.App.5th at p. 651.)
Gary argues that such undisputed evidence exists based on the February 28, 2002 "Annual Financial Statements" of Placebo Designs prepared by his accountant. Specifically, under "Note 3" entitled "Loans from Members," it shows that at the end of February 2001 Placebo Designs owed Gary 389,657 Rand and at the end of February 2002 that number had decreased to 40,917, or a difference of 348,740. Gary claims that this difference is the amount Placebo Designs repaid him on an excluded "loan account" as provided in paragraph 8.2 of the ANC.
Gary testified the South African financial year runs from February to February.
This evidence, however, does not establish the value of the loan account from Placebo Designs as of the date of marriage, as required under the accrual system, much less as a matter of law. That Placebo Designs owed Gary 389,657 Rand at the end of February 2001, as determined by a report generated more than a year later, does not compel a finding that Gary was owed this sum on December 31, 2000. To conclude otherwise would be to engage in speculation, which we cannot, and will not, do. (See Hasson v. Ford Motor Co. (1977) 19 Cal.3d 530, 548 ["As in other applications of the 'substantial evidence' principle, the requisite standard cannot be met by mere speculation or conjecture."].) We thus reject this claim of error.
However, even assuming the evidence proffered by Gary established as a matter of law the value of the Placebo loan account at the commencement of marriage, we would still reject this claim of error. The evidence Gary offered does not establish as a matter of law a "clear nexus" between the loan account proceeds (ostensibly repaid sometime between February 2001 and February 28, 2002) and the creation and funding of Interio USA in or about August 2003.
Indeed, Gary was never clear regarding the exact source of the funds he used to form Interio USA. In addressing the "significan[ce]" of the February 28, 2002 Annual Financial Statements, he testified it was produced "just two months after the business's assets were sold" at the fire sale and "it shows that [he] had money in [his] business or in [his] loan account that more than covered any money that left South Africa, that ended up in England, and that ended up in the United States." (Italics added.) Such "evidence," however, is insufficient to compel a finding that it was the proceeds from the loan account, and not from the nonexcluded fire sale, that were used by Gary to form Interio USA. (See Estes, supra, 51 Cal.App.5th at p. 651.)
F. Expansion of Interio SA
Gary contends Interio USA should be excluded from accrual because this business was merely an expansion of the Interio brand, as he used the same logo, designs, spreadsheets, pricing, manufacturing processes, and software used by Interio SA. He thus argues he merely "transferred" the Interio business from South Africa to the United States, and thus Interio USA should likewise be excluded.
Generally described by the trial court as the "intellectual property" of Interio SA, it found such property was not excluded because it was not identified in the ANC; belonged to Interio SA and not Gary; there was no value ever placed on this asset; and even if capable of valuation, it was not an asset that could be excluded under South African law. We agree.
As we have discussed, the only assets excluded from accrual was Gary's "member's interest and/or loan account" in the South African Companies. The intellectual property was owned by Interio SA, a separate juristic person, distinct from Gary as a member. In addition, there is no evidence of the valuation of this asset, as found by the trial court, much less as of the date of marriage.
To the extent Gary is trying to exclude from accrual his skill and knowledge in the manufacturing business through expansion of the Interio brand, we conclude this would be contrary to South African law. Gary's argument is not unlike the argument advanced by the husband in REM. In fact, the husband in REM had an even stronger argument than Gary for exclusion from accrual because the clause in REM excluded not only the husband's VIP trust asset but "any other trust conducting business in the vacation time share property market." (REM, supra, (3) SA 371 (SCA) at 376.) Despite the inclusion of the "any other trust" language, the REM court rejected the husband's claim that additional trusts he created through his extensive knowledge in the vacation timeshare industry were excluded, finding the clause was incapable of "such a wide meaning." (Id. at 377.) Thus, even if paragraph 8.2 had included language accounting for the expansion of the Interio brand based generally on Gary's skill and knowledge in the manufacturing business, under REM this expanded business (i.e., Interio USA) would not be excluded from his accrual estate. (See ibid.)
Moreover, Advocate de Wet testified that the skills and knowledge a person acquires in conducting a business do not constitute an asset subject to exclusion from the person's accrual estate; and that to conclude otherwise "would make a mockery of the fundamental principles that marriage is [a] partnership." De Wet added, "We do put a future together. We work towards the greater good as a partnership. That principle is very entrenched in matrimonial in South Africa ...."
The trial court relied on this testimony when it found that Gary's "knowledge and experience, and any special 'intellectual property' he developed in South Africa at Interio [SA] or Placebo [Designs], would be to exclude what is really marital effort, and under South African law, that is never excluded." We agree with this statement and thus, for this separate reason, conclude the court did not err in finding Gary's expansion of the Interio brand was not an excludable asset under paragraph 8.2 of the ANC.
In light of our decision that Interio USA is not excluded from the accrual of Gary's estate, we deem it unnecessary to decide whether (1) the trial court erred in finding Brett and Benita, and not Gary, "owned" Interio USA from 2003 to 2011 because, during this period, they were the ones taxed on the company's profits and the company's K-1s listed only them as business owners; and (2) there was sufficient evidence of a nexus or "connecting thread" between the (nonexcluded) assets of Interio USA and ChemxWorks.
II. Valuation of ChemxWorks
Gary contends the trial court erred in relying on the report of Tony Yip, its Evidence Code section 730 expert, who valued ChemxWorks at $2.116 million. Gary argues this figure is "contrary to substantial evidence" that, due to the company's "undue dependence" on him and its company's "high inventory liabilities," the value should have been $800,000 less than Yip's valuation, or $1.31 million as his expert Brinig opined. We reject this claim of error, and view Gary's contention as another example of his attempt to reargue the facts and obtain a more favorable result on appeal.
A. Additional Background
Yip's December 10, 2020 report (Yip Report) relied on several sources of information for his valuation assessment, including ChemxWorks' accounting records and tax returns for years 2013 through 2018; statements, invoices, and receipts supporting business expenses; company history; independent research on myriad subject matters; and discussions with and information provided by Gary and the company's tax accountant.
The Yip Report discussed the D-Carbonator cleaning system and detergent Gary developed for use in commercial kitchens. The components of the system were manufactured by third parties and "assembled by employees of ChemxWorks, including [Gary]." (Yip Report, p. 5.) At the date of valuation, ChemxWorks had four full-time employees (excluding Gary), including a warehouse employee and salespeople, and hired part-time employees to assist with warehouse operations and logistics on an as-needed basis. (Ibid.)
The Yip Report discussed three generally accepted valuation approaches, ultimately relying on only two of them-the capitalization of earnings method and the market approach-to determine the "marital value" of ChemxWorks as of December 31, 2018. (Yip Report, p. 6.)
Yip defined "marital value" as the "investment value of the business interest to a defined . . . hypothetical, objective investor." (Yip Report, p. 2.)
Under the capitalization method, ChemxWorks' income and expenses were analyzed to determine the "normalized" earnings of the company, which depended on certain adjustments included in a schedule attached to the Yip Report. (Yip Report, p. 6) The business value was determined by dividing the "after-tax normalized earnings by a capitalization rate that represents the rate of return an investor would expect given the inherent risk associated with the expected earnings stream." (Ibid.) Using this approach, Yip valued ChemxWorks at $2.198 million. (Ibid.)
For the market approach, Yip used data based on actual sales of companies comparable to ChemxWorks. (Yip Report, p. 6.) He used market transaction data from the DealStats and BizComps databases and determined that the price-to-earnings (P/E) market multiples resulted in P/E ratios of 2.7 and 2.0, respectively, leading to a valuation of ChemxWorks between $1.966 and $2.102 million. (Ibid.) Yip merged the valuations from the two approaches and determined the "100 percent equity interest in ChemxWorks" was $2.116 million. (Id. at p. 7.)
At trial, Yip testified he and his team arrived at the capitalization or "cap rate" for the capitalization method based on a series of assumptions and "studies that have been performed to provide . . . empirical data on rate[s] of returns from investing in the . . . equity market." He noted the final number for the capitalization rate is a "judgment call" and based on his knowledge and experience, he determined a 16 percent figure was appropriate.
Yip was also questioned about his analysis in determining the normalized earnings based on ChemxWorks' profit and loss statements and other information. He determined that figure was $351,000. In doing so, he gave no consideration to an "inventory movement account" of the company. Yip explained the inventory movement account, as "best [he could] tell," was based on "journal entries made after the year end." He noted that, for example, in 2018 when he was first provided with ChemxWorks' profit and loss statements, the entry for inventory movement "was not there," despite "receiving the data about nine months after the close of the books." After receiving the data, Yip asked for an explanation and supporting documentation, but "ultimately, there was nothing that was provided to support that [account]. From [Yip's] standpoint, these entries appeared to be general entries made for the purpose of reducing income for tax purpose[s]."
On further questioning, Yip reiterated that Gary and his accountants provided no documentation "at all" to support the "journal entry" for this account; that he discussed this issue with Gary over the telephone and not in person because of the ongoing pandemic, and overall spent "hours" discussing "inventory accounting, how the debits and credits work, and the basis for all [of] this"; but despite such discussions, that in the end he felt "there was no explanation . . . sufficient to support that journal entry." If the inventory movement account had been considered, it would have reduced the $351,600 normalized earnings figure, thereby reducing the valuation of ChemxWorks to about $1.442 million.
Yip also addressed capitalization rates and multiples, noting they were the inverse of each other. He testified regarding how he arrived at both figures, and the valuations under both approaches, which were included in schedules attached to his report. In conducting his valuation, Yip did not consider the impact on ChemxWorks' business if Gary was unable to work, as Yip's underlying assumption was that the business would continue.
Brinig testified he disagreed with Yip's valuation of ChemxWorks and in particular the capitalization rate Yip used and his refusal to make an inventory adjustment to income. Brinig testified he instead would have used a 24 percent cap rate (that equated to a 4.17 multiple) because ChemxWorks was a "small business that is heavily dependent on [Gary], doesn't have a very long track record"; and thus a buyer would consider those risks in valuing the business that Brinig believed was "very much . . . a one-man show." As such, Brinig opined the capitalization rate should have been much higher than Yip's 16 percent number, which in turn would have lowered the valuation of ChemxWorks.
Regarding the inventory movement adjustment, Gary testified this account was used to make "internal adjustments" for a number of things including problems with tanks manufactured in China and tanks that had been leased and returned after the lease ended.
Brinig testified he was provided "some support" for an inventory adjustment in 2018, accounting for about 65 percent of the adjustment Gary sought. Brinig personally met with Gary and saw first-hand "some significant design problems" with a "timer switch" and "heaters" in some of the tanks that had to be cut out and replaced. Brinig thus would have adjusted ChemxWorks' income to account for these "losses."
The trial court adopted Yip's valuation over Brinig's. As relevant here, it rejected Gary's objection to the capitalization rate used by Yip and Yip's refusal to make an "inventory adjustment," both of which would have produced a lower valuation of ChemxWorks.
As to the former, the trial court acknowledged Brinig's testimony that Gary's contributions to the business were so "unique" and his expertise in manufacturing "so vital" to its success that a higher capitalization rate should have been used. It nonetheless found Yip's opinion on this issue more "persuasive," noting that the "soak tanks" Gary used in his business were manufactured elsewhere; that he was not in the wholesale business but instead delivered the tanks to an "end user"; that the business was not particularly risky, despite having some design flaws when the company was being launched; that there was no evidence presented that those adjustments were so extensive as to require a "highly skilled individual to make them"; and to the contrary, there was evidence that Gary's employees were able to make such adjustments.
As to the latter, the trial court credited Yip's testimony that he lacked sufficient evidence to make inventory adjustments after speaking to Gary and his accountants. The court explained: "Mr. Yip testified that he repeatedly asked for documents to support this claim. He testified that no documents were produced to sustain Gary's assertion that he was having to make adjustments for tanks and equipment that he had to replace when they were faulty or had to be repaired, and to support this line item." The court also credited Yip's conclusion that "the proper way to have made such an adjustment on the books would [have been] to show the returned items as a loss."
B. Analysis
"In reviewing a judgment based upon a statement of decision following a bench trial, we . . . apply a substantial evidence standard of review to the trial court's findings of fact. [Citation.] Under this deferential standard of review, findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings." (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981; accord, Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 59-60.) We do "not reweigh the evidence, evaluate the credibility of witnesses or indulge in inferences contrary to the findings of the trial court. [Citations.] The substantial evidence standard of review is generally considered the most difficult standard of review to meet, as it should be, because it is not the function of the reviewing court to determine the facts." (In re Michael G. (2012) 203 Cal.App.4th 580, 589 (Michael G.); accord, People ex rel. Brown v. TriUnion Seafoods, LLC (2009) 171 Cal.App.4th 1549, 1567 ["The substantial evidence rule applies equally to expert and lay testimony."]; id. at p. 1568 ["[T]he trial court is free to reject testimony of a party's expert, so long as the trier[-of-fact] does not do so arbitrarily."].)
Here, there is ample evidence supporting the trial court's findings of fact to support its determination that Yip's use of a 16 percent capitalization rate was proper in valuing ChemxWorks. This includes evidence that the components for the D-Carbonator system were manufactured by third parties; that ChemxWorks had "multiple sources" of income including "chemical sales"; that ChemxWorks had four full-time employees (excluding Gary), including a warehouse employee and hired part-time employees on an as-needed basis; that two of those employees were involved in sales; and that the determination of the capitalization rate was a "judgment call" based on a variety of factors.
In light of such evidence and our standard of review, we are not at liberty to reweigh the evidence and make new or different findings, which is essentially Gary's request on appeal when he argues we should accept Brinig's analysis and testimony over Yip's and we should apply a 24 percent capitalization rate in redetermining ChemxWorks' value. (See Michael G., supra, 203 Cal.App.4th at p. 589 [a court of review does not reweigh the evidence when a finding by the fact finder is supported by substantial evidence]; accord, San Diego Metropolitan Transit Development Bd. v. Cushman (1997) 53 Cal.App.4th 918, 931 (Cushman) [" 'The trier of fact may accept the evidence of any one expert or choose a figure between them based on all of the evidence.' [Citation.] There is insufficient evidence to support a verdict 'only when "no reasonable interpretation of the record" supports the figure[.]' "].)
We reach a similar conclusion regarding the trial court's decision not to make inventory adjustments to income generated by ChemxWorks in 2017 and 2018. As summarized ante, the court credited Yip's testimony that he lacked sufficient information to make this adjustment after speaking for "hours" to Gary and his accountants, and that, in any event, the proper way to have made any such adjustments would have been to show the return items "as a loss" on the company's books. The court also found Brinig's testimony on this issue "not persuasive," as it found he merely relied on the "anecdotal photograph of one tank, or the onsite inspection" (see Michael G., supra, 203 Cal.App.4th at p. 589 [evaluation of a witness's credibility is a function of the trier of fact]); and that it reviewed the "extensive documents" (included in exhibit 497) attached to Brinig's report and could not locate any which accounted for a 65 percent inventory adjustment.
Gary takes issue with the trial court's finding that Yip was not provided with documentation to support Gary's inventory adjustment request. Specifically, Gary argues his October 13, 2021 ex parte application sought, pursuant to Code of Civil Procedure section 128, subdivision (a)(8), to "correct errors in the record" before entry of judgment. In support, he lodged an email from November 2020 to Yip's associate, Michele Atkinson, that included documents allegedly supporting an inventory adjustment, which were "inadvertently not included" in Yip's file (exhibit 493), although they were in evidence as they were included in Brinig's file (exhibits 497 and 499).
Code of Civil Procedure section 128, subdivision (a) sets out the powers of a court including, as relevant here, "(8) [t]o amend and control its process and orders so as to make them conform to law and justice." (Code Civ. Proc., § 128, subd. (a)(8).)
Gary on appeal contends Yip's failure to consider this documentation "discredit[ed] his methodology"; that the trial court erred when it denied ex parte relief to "correct" the record, finding it was incumbent on Gary to bring the inventory adjustment files to the attention of the court and Yip during the trial; and that on appeal we instead should adopt Brinig's lower valuation of $1.31 million ($2.116 million less $800,000) as a result of such documentation.
First, Gary's argument on appeal that the trial court erred in failing to "correct the record" during the ex parte hearing is, in our view, yet another request for a reweighing of the evidence and for a new finding reducing ChemxWorks' valuation. This we cannot do. (See Michael G., supra, 203 Cal.App.4th at p. 589; Cushman, supra, 53 Cal.App.4th at p. 931.)
Second, we note Gary on appeal has abandoned his argument from his ex parte papers that Code of Civil Procedure section 128, subdivision (a)(8) provided the trial court with the "inherent authority . . . to correct errors in the record . . . before the entry of judgment." We note Gary has offered no authority in its place. As such, we consider this issue forfeited on appeal. (See Ewald v. Nationstar Mortgage, LLC (2017) 13 Cal.App.5th 947, 948 (Ewald) ["[T]he failure to provide legal authorities to support arguments forfeits contentions of error."]; Troensegaard v. Silvercrest Industries, Inc. (1985) 175 Cal.App.3d 218, 228 (Troensegaard) [points raised without citation to authority are deemed forfeited or without merit].)
Third, we agree with the trial court that, to the extent this was an issue, it should have been raised at trial, or before it issued its final SOD. At the very least, Gary should have addressed it in his 60-plus pages of objections to the tentative SOD, as he then was aware of Yip's testimony and the court's finding regarding the alleged lack of documentation to support the inventory adjustment. His failure to object to the tentative SOD on this ground also forfeits the issue on appeal. (See In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 346 [failure to object to proposed statement of decision forfeits issue on appeal]; accord, Rebney v. Wells Fargo Bank (1991) 232 Cal.App.3d 1344, 1350 ["Having failed to give the trial court an opportunity to correct the claimed defects in the statement of decision, [appellant] cannot fairly be permitted to complain of them now."].)
Fourth, the trial court acted well within its discretion in denying Gary ex parte relief to reopen the evidence months after the close of trial and issuance of the tentative SOD. Although a trial court has "broad discretion in deciding whether to reopen the evidence" (Horning v. Shilberg (2005) 130 Cal.App.4th 197, 208), "denial of a motion to reopen will be upheld if the moving party fails to show diligence or that he [or she] had been misled by the other party" (Guardianship of Phillip B. (1983) 139 Cal.App.3d 407, 428 (Phillip B.)). We review a court's denial of a motion to reopen for abuse of discretion. (Horning, at p. 208.)
Gary sent the email to Yip's associate in early November 2020; Yip issued a draft report later that same month reversing the "inventory movement journal entry" based on lack of supporting documentation; Gary was given the opportunity to comment on the draft, but did not do so; at Yip's December 2020 deposition, and consistent with his draft report, he testified about not receiving any documentation to support the journal entries, which statements he reiterated in his final report issued on December 10, 2020; as summarized ante, Yip repeated these same statements during trial, without a response from Gary; on July 6, 2021, the trial court issued its tentative SOD stating no documents were produced to support an inventory adjustment to ChemxWorks' income; on August 31, 2021, the court issued its final SOD; and on October 13, 2021, Gary brought his ex parte application allegedly to merely "correct" the record regarding the documents in Yip's file.
Quite clearly, Gary had multiple opportunities before, during, and after trial (before the trial court issued its final SOD) to rebut Yip's contention that he never received any documentation from Gary to support an inventory adjustment and a concomitant decrease in ChemxWorks' income. Gary does not explain why he waited until October 2021 to raise the matter, when it was indisputably at issue, and his failure to do so supports a finding of lack of diligence. (See Phillip B., supra, 139 Cal.App.3d at p. 428.) We thus reject any claim of error based on the trial court's valuation of ChemxWorks.
III. Spousal Support
Gary contends the trial court erred when it awarded Robyn permanent spousal support of $7,500 per month in its final SOD, after initially awarding her $6,000 per month in its tentative SOD. He argues the court erred in making this award by improperly attributing "healthy profits" to ChemxWorks, despite what he claims are reported losses on the business's tax returns, and limited income and business losses on both Gary's tax returns and his income and expense declarations.
A. Additional Background
Yip was also retained by Gary and Robyn to perform an analysis of their incomes for purposes of setting support through May 31, 2020 (exhibit 410b for Gary). The trial court adopted Yip's analysis, finding Gary's income was "much higher . . . than Gary reported during these proceedings," where "[e]ven at trial" he "argued that he really [didn't] make much money, and that his standard of living [was] quite modest." However, Yip's analysis showed Gary's income was "far from . . . modest," as it revealed monthly income from wages and ChemxWorks of $62,220 in 2018 to $50,323 through 2020. Yip found Robyn's monthly income in 2018 was $6,407; in 2019 was $7,919; and in 2020 was $8,530.
Although Gary chose to "leave money in the business to expand and provide a cushion," the trial court noted the law required it to use Gary's available income to set permanent support pursuant to the factors set forth in Family Code section 4320. The court made the permanent spousal support order of $7,500 per month deductible by Gary and taxable to Robyn as per the parties' stipulation. The order became effective on March 1, 2021, and terminates upon the death of either party or Robyn's remarriage. (See Fam. Code, § 4337.) The court determined this award to Robyn was "reasonable," while still allowing Gary to "leave money behind in the business for a rainy day."
B. Guiding Principles
Family Code "[s]ection 4330 authorizes the trial court to order a party to pay spousal support in an amount, and 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 the circumstances set forth in section 4320." (In re Marriage of Nelson (2006) 139 Cal.App.4th 1546, 1559 (Nelson); accord, In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 302.) The statutory factors include the supporting spouse's ability to pay; the needs of each spouse based on the marital standard of living; the obligations and assets of each spouse, including separate property; and any other factors pertinent to a just and equitable award. (Fam. Code, § 4320, subds. (c)-(e), (n); In re Marriage of Ficke (2013) 217 Cal.App.4th 10, 23 [Family Code section 4320 sets forth fourteen statutory factors that a court must consider in ordering spousal support, which factors reflect not "a melange of factors, but [rather] an expression of several policy preferences"].)
"The trial court has broad discretion [under Family Code section 4320] in balancing the applicable statutory factors and determining the appropriate weight to accord to each, but it may not be arbitrary and must both recognize and apply each applicable factor." (In re Marriage of Ackerman (2006) 146 Cal.App.4th 191, 207.) We review spousal support orders under the deferential abuse of discretion standard. (Nelson, supra, 139 Cal.App.4th at p. 1559.)
C. Analysis
Gary's challenge on appeal to the award of permanent spousal support is limited to the trial court's finding of his available income, which it adopted from the Yip Report. Gary cites In re Marriage of Loh (2001) 93 Cal.App.4th 325, 332 (Loh), which provides that recent income tax returns are "presumptively correct" as to a person's gross income. Gary argues that, based on this presumption, the trial court erred in relying on income figures from the Yip Report rather than ChemxWorks' and Gary's tax returns and Gary's income and expense declarations. We disagree.
Loh reversed the trial court's child support order for lack of sufficient evidence, after the trial court increased the father's support obligation based on "lifestyle evidence" presented by the mother, which included photographs showing the husband in the "home of his girlfriend and in or by a series of cars." (Loh, supra, 93 Cal.App.4th at p. 327.) In so doing, Loh noted that the mother had sought this increase "without first obtaining [the father's] most current tax returns" (ibid.); that the trial court determined he had a" 'nontaxable' income of $9,000 [per month]-a figure which appears to have been plucked from thin air" (ibid.); that the husband's income and expense declaration, "otherwise noncontroverted at the hearing," showed a gross income of $68,000 over the previous 12 months (ibid.); and that "lifestyle" evidence, particularly in light of the husband's new nonmarital partner, was "not a cheap substitute for proper discovery of income reported on tax returns" (ibid.).
Loh is inapposite here. In modifying permanent spousal support, the trial court in the instant case neither relied on "lifestyle evidence" nor was its income determination "plucked from thin air" as was the case in Loh. To the contrary, the court relied on the Yip Report which included a detailed analysis of income and expenses of Gary and ChemxWorks based on seven categories of information and documentation including tax returns of Gary and ChemxWorks; accounting files of ChemxWorks; W2's of Gary; and year-to-date earnings statements from ChemxWorks (through May 2020).
But that's not all. The parties also presented the trial court with "marital lifestyle analyses" prepared by their respective experts. These analyses showed for a period of 60 months their marital lifestyle averaged between $18,048 per month per Brinig and $21,268 per month per Robyn's forensic expert, Greg Kaseno.
The trial court also found that Gary had a "very healthy income from ChemxWorks, even though he [chose] to leave money behind in the company, and himself live[s] a very frugal lifestyle (far below the marital standard of living). [¶] These earnings are available to Gary, but have not been drawn down by him out of [ChemxWorks]. He is not even taking what Mr. Yip recommended as a normal salary for a CEO for a company such as ChemxWorks, at $200,000." Gary did not challenge these findings on appeal, and in any event, there is ample evidence to support them. (See Michael G., supra, 203 Cal.App.4th at p. 589.) Nor does Gary challenge the trial court's determination that it would be an abuse of discretion for it not to consider the money he left behind in the business when calculating spousal support. (See In re Marriage of Blazer (2009) 176 Cal.App.4th 1438, 1448 [noting "in the face of an ambiguity as to whether disputed sums represent income available for support, that determination is committed to the court's discretion"].)
Based on the foregoing, and because Gary is again seeking to relitigate the issue of permanent spousal support despite the trial court's proper exercise of discretion and findings that are supported by substantial evidence (see Michael G., supra, 203 Cal.App.4th at p. 589), we reject this claim of error.
IV. Security for the Equalization Payment
Gary contends the trial court lacked "jurisdiction" and "exceeded its authority" when ordering him to obtain a 10-year, $1.5 million life insurance policy naming Robyn as beneficiary, as security for his equalization payment over a 24-month period and for his payments of temporary support arrears. We disagree.
The trial court ordered Gary to pay retroactive child and spousal support, with credits for any court-ordered support payments already made. Gary on appeal has not challenged the temporary support awards.
First, although the trial court ordered Gary to "cover the premiums on the policy" for a "term [of] ten years, subject to renewal," he fails to mention that the court also ordered that once those payments were completed, Robyn had the option to "assume the premiums, or Gary ha[d] the option to cancel the policy or change the beneficiary, with 30 days' notice in writing to Robyn." (Italics added.) Thus, while Gary in part is complaining about the 10-year, court-ordered term of the policy, as he himself acknowledges that term likely would only be "slightly longer" than two years.
Second, Gary provides no authority for his contention that the trial court lacked "jurisdiction" or "exceeded its authority" to make this order. (See Ewald, supra, 13 Cal.App.5th at p. 948 [failure to provide legal authorities to support arguments results in forfeiture of error]; Troensegaard, supra, 175 Cal.App.3d at p. 228 [same].)
Third, Gary recognizes that a trial court has authority (and thus "jurisdiction") to order a supporting party to provide "reasonable security" for payment of spousal support. (See Fam. Code, § 4339 [a "supporting party" may be ordered "to give reasonable security for payment of spousal support"].)
For these reasons, we conclude the court properly exercised its discretion when it required Gary to obtain and maintain life insurance until he completed the equalization and the support arrears payments. (See In re Marriage of Morton (2018) 27 Cal.App.5th 1025, 1039 ["The concept of a reasonable exercise of discretion means that trial courts must follow established legal principles."].)
In light of our decision-including that Robyn's (protective) crossappeal is moot, we deem it unnecessary to decide Gary's contention that the trial court erred when it ruled that, should its order denying exclusion of Interio USA and ChemxWorks from the accrual system and/or an award of permanent spousal support be overturned on appeal, it would "revisit[ ]" its decision not to award Robyn attorney fees. (See Fam. Code, § 2030 ["(a)(1) In a proceeding for dissolution of marriage . . ., and in any proceeding subsequent to entry of a related judgment, the court shall ensure that each party has access to legal representation . . . to preserve each party's rights by ordering, if necessary based on the income and needs assessments, one party . . . to pay to the other party, or to the other party's attorney, whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding."].)
DISPOSITION
The judgment is affirmed. Robyn is entitled to her costs on appeal. (See Cal. Rules of Court, rule 8.278(a)(1).)
WE CONCUR: KELETY, J., CASTILLO, J.