Marr. of Finby

Filed 12/18/13 Certified for publication 1/7/14 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
In re the Marriage of MARK and
RHONDA FINBY.
MARK FINBY,
G046814
Appellant,
(Super. Ct. No. 10D004955)
v.
OPINION
RHONDA FINBY,
Respondent.
Appeal from a judgment of the Superior Court of Orange County, Ronald
P. Kreber, Judge. Reversed.
Law Offices of Brian G. Saylin and Brian G. Saylin for Appellant.
Phillips, Whisnant, Gazin, Gorczyca & Curtin, Gary S. Gorczyca and
Daniel Gorczyca for Respondent.
Mark Finby (husband) appeals from a judgment on reserved issues,
covering child custody and support, spousal support, and division of the parties’ assets.
He contends the trial court erred in its characterization, valuation, and division of Rhonda
Finby’s (wife) bonuses conditionally received or earned from her employer before the
parties separated. We find his arguments have merit and reverse the judgment.
FACTS
The parties married in 1995 and separated in February 2010. During the
marriage, wife worked as a financial advisor. Before January 2009, she worked for UBS
Financial Services. She developed a list of clients referred to as her “book of business.”
As of January 2009, the value of her clients’ investments exceeded $192 million.
That month wife signed a contract with Wachovia Securities LLC, entitled
“Offer Summary,” agreeing to work for it as a financial advisor and its managing director
of investments. (Some capitalization omitted.) Shortly thereafter, Wachovia was
purchased by Wells Fargo Advisors (Wells Fargo).
The offer summary contained several compensation bonuses. The first, a
transitional bonus exceeding $2.8 million, was “based on 150% of [wife’s] pre-hire
trailing twelve months production . . . of $1,868,631.00 . . . and pre-hire assets of
$192,671,911.” Her entitlement to receive the entire amount was conditioned on her
remaining employed as a financial advisor by Wells Fargo for 112 months, maintaining a
gross production level of over $1.12 million on each anniversary date, and remaining
current on any other obligations she owes to the firm.
Wife chose to immediately receive the entire amount of the transitional
bonus. Thus, payment was arranged as a loan evidenced by a promissory note whereby
Wells Fargo agreed to forgive the sum of $27,687.54 each month over 112 months. For
tax purposes, Wells Fargo credited wife with an equal amount of income on each
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monthly pay voucher. However, to enforce the foregoing conditions, it was provided that
if she stopped working for Wells Fargo, the entire unpaid balance of the loan would be
due. In the event wife continued working for the firm but failed to satisfy the minimum
production quota during annual reviews, Wells Fargo could “reduce the amount of [the]
[m]onthly . . . [b]onus [p]ayment” credited to her.
The offer summary also provided wife could receive a deferred recruitment
award bonus of $186,863. But to be eligible for it she must remain employed by Wells
Fargo until January 31, 2016.
In addition, the offer summary stated wife was eligible for two production
bonuses. Wells Fargo agreed to pay her a first production bonus of $373,726 if her “total
gross production equal[ed] or exceed[ed] $1,494,905.00 in the best twelve months of the
first fourteen month period beginning February 2009 and ending March 2010 . . . .” Wife
achieved this goal and received the entire amount of the bonus in April 2010. Like the
transitional bonus Wells Fargo arranged the payment as a loan evidenced by a promissory
note with the balance to be forgiven in equal monthly installments over a 10-year span,
and crediting an equal amount as income on wife’s monthly pay vouchers. In addition,
Wells Fargo’s forgiveness of this obligation was also subject to the same employment
and production level conditions. The offer summary authorized a second production
bonus if wife achieved a higher gross production level between April 2010 and March
2011. Wife failed to achieve the higher production goal and did not qualify for this
bonus.
In mid-2009, Wells Fargo announced another benefit for its financial
advisors, entitled a level 4front bonus. Wife testified that to receive it, she had to meet
with clients, prepare and maintain investment profiles of them, plus follow up with each
client’s investment profile. She qualified for this bonus and was paid $890,000 in mid-
2010. As with the foregoing bonuses, payment of the level 4front bonus was arranged as
a loan evidenced by wife’s promissory note with Wells Fargo agreeing to forgive the
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balance in equal installments over 108 months and, for tax purposes, crediting an equal
amount as income to each of her pay vouchers. Wife testified this bonus was also
conditioned on her remaining employed with Wells Fargo and maintaining her client’s
financial profiles.
Both parties presented expert testimony on wife’s book of business and the
character of the bonuses she received. Andrew Hunt, a certified public accountant,
testified for wife. He employed the time rule to determine the character of the bonuses
and accompanying loans. He described the transitional bonus as a “mixed-type asset,”
with “approximately . . . 13 and a half percent of” it “on an after-tax basis was
community” and the balance being wife’s separate property. Hunt concluded the first
production bonus and the level 4front bonus were wife’s separate property because, being
earned over a period of years, they were received after separation.
Wife also called Quinton Ellis, an associate with a firm providing litigation
assistance to firms in the securities industry. He described the transitional bonus as a
“kind of pay for the book of business . . . coming over,” calculated as a “multiple of the
value of . . . the [recruitee’s] production credits of the trailing 12 months before they were
to join your firm.” The hiring firm would also expect to receive “a nine- to ten-year
commitment to earn that bonus” because “you don’t want to pay somebody upfront and
then have them go into early retirement once they join the firm.” Ellis described the
production bonus as “a back-end bonus” that is a “performance-based” incentive for the
“consultant to work extremely diligently in bringing their book over, as well as to
continue to seek new business and continue to be successful . . . .” The level 4front
bonus required wife to perform extensive analytical work and complete financial plans
for her clients. David Altshuler, wife’s boss, testified the level 4front bonus was a
“loyalty award” created “to retain our financial advisors.”
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Barbara DiFranza, an attorney and certified family law specialist testified
that in her opinion, the bonuses constituted community assets. She described wife’s book
of business as “[t]he consideration” for the benefits contained in the offer summary.
Husband also called Howard Buchler, an attorney with previously work
experience in the securities industry. Buchler agreed with Ellis that the offer summary’s
transitional bonus compensated wife for bringing her book of business to Wells Fargo.
He stated the brokerage industry now recognizes that brokers own their book of business.
Asked if a market existed for “a financial advisor . . . to sell her book of business,”
Buchler responded, “the market for it would be . . . [moving to] another [firm].”
Stephen Zamucen, a certified public accountant called by husband, testified
the bonuses wife received were community assets. He explained the bonuses were either
based on her book of business (transitional), agreed to before the parties separated, or
based on wife’s pre-separation production (first production and level 4front).
The court issued a statement of decision and entered judgment. On wife’s
book of business, the court ruled it had no value and husband did not have an interest in
it. In its statement of decision, the court agreed wife received a high salary from Wells
Fargo because of the value of the investments held by her clients, but husband’s
assistance in helping wife transfer her clients to Wells Fargo “did not give[] him an
interest in the [b]ook of [b]usiness,” “there was no expert testimony given as to the value
of” it, and, citing In re Marriage of McTiernan & Dubrow (2005) 133 Cal. App. 4th 1090,
found the book of business “cannot be transferred to another party for a price.”
As for the bonuses, the court ruled the portion of transitional bonus earned
during the first 11 months of wife’s employment with Wells Fargo (slightly over
$380,000) was received before separation and thus constituted community property to be
divided between the parties. But it concluded the balance of that bonus and the
remaining bonuses were wife’s separate property because they were not paid or due until
after the parties separated. In addition, the court noted wife’s retention of the bonuses
5
was subject to her continued employment and minimum production requirements
enforced by the promissory notes. It found the reasoning in In re Marriage of Doherty
(2002) 103 Cal. App. 4th 895 and Garfein v. Garfein (1971) 16 Cal. App. 3d 155 supported
its findings.
DISCUSSION
1. Introduction
The issues presented in this appeal are the trial court’s characterization and
valuation of wife’s list of clients, i.e., her book of business, and the bonuses Wells Fargo
conditionally agreed to pay her.
“In general, all property that a spouse acquires during marriage before
separation is community property.” (In re Marriage of Green (2013) 56 Cal. 4th 1130,
1134; see also Fam. Code, § 760; all further undesignated statutory references are to this
code.) Cases have recognized that Family Code section 760 creates “‘a general
presumption that property acquired during marriage by either spouse other than by gift or
inheritance is community property unless traceable to a separate property source.’” (In re
Marriage of Rossin (2009) 172 Cal. App. 4th 725, 731.) However, “[t]he earnings and
accumulations of a spouse . . . while living separate and apart from the other spouse, are
the separate property of the spouse.” (Fam. Code, § 771, subd. (a).)
Under California’s community property law, the characterization of
“property as separate, community, or quasi-community” “is an integral part of the
division of property on marital dissolution.” (In re Marriage of Haines (1995) 33
Cal. App. 4th 277, 291.) Courts recognize several factors relevant to this task (see In re
Marriage of Rossin, supra. 172 Cal.App.4th at p. 732), but “the most basic
characterization factor is the time when property is acquired in relation to the parties’
marital status” (In re Marriage of Haines, supra, 33 Cal.App.4th at p. 291). The “factual
6
findings that underpin the characterization determination are reviewed for substantial
evidence” (In re Marriage of Rossin, supra, 172 Cal.App.4th at p. 734), but “[i]nasmuch
as the basic ‘inquiry requires a critical consideration, in a factual context, of legal
principles and their underlying values,’ the determination in question amounts to the
resolution of a mixed question of law and fact that is predominantly one of law.
[Citation.] As such, it is examined de novo” (In re Marriage of Lehman (1998) 18
Cal. 4th 169, 184).
Once the court determines the assets and liabilities of the community estate,
it must value them and make an equal division of the estate. (§§ 2550-2552, 2601, 2620
et seq.; see In re Marriage of Walrath (1998) 17 Cal. 4th 907, 924.) Issues concerning the
valuation and apportionment of community property are reviewed for abuse of discretion.
(In re Marriage of Lehman, supra, 18 Cal.4th at p. 187 [apportionment]; In re Marriage
of Ackerman (2006) 146 Cal. App. 4th 191, 197 [valuation].)
2. The Book of Business
As noted, the trial court awarded wife’s book of business to her. Citing In
re Marriage of McTiernan & Dubrow, supra, 133 Cal. App. 4th 1090, it concluded since
wife could not sell her client list, her book of business “has no value[,] and . . . [husband]
does not have an interest in” it. On appeal, husband attacks this ruling. He argues the
book of business can be valued even if there is no market for it, and in fact she sold her
book of business when moving from UBS to Wells Fargo. Husband also relies on the
Supreme Court’s decision in In re Marriage of Brown (1976) 15 Cal. 3d 838 (Brown) and
other cases following it for the proposition that rights created under an employment
contract entered into during marriage, even if contingent in nature, constitute divisible
community assets. Wife disagrees, arguing the trial court properly found her book of
business was nontransferable, “Wells Fargo agreed to pay [her] a significant sum of
7
money because she is successful at her job,” and that her “success is primarily measured
by the amount of assets she manages.”
We conclude the trial court’s ruling on the nature and value of wife’s book
of business constituted error. “[T]o qualify as community property, an asset or interest
must be ‘property’ within the meaning of the community property laws.” (In re
Marriage of Spengler (1992) 5 Cal. App. 4th 288, 297.) Husband argues wife’s status as a
licensed financial advisor with the ability to induce clients to follow her when
transferring to a new firm is similar to the goodwill found in the business of other
professions such as lawyers and doctors.
This argument has merit. Business and Professions Code section 14100
declares “[t]he ‘good will’ of a business is the expectation of continued public
patronage.” “[I]t is well established that the goodwill of a . . . professional practice as a
sole practitioner created during marriage constitutes a divisible asset of the community in
an action for dissolution of marriage. (In re Marriage of Foster (1974) 42
Cal. App. 3d 577, 582; see also In re Marriage of Watts (1985) 171 Cal. App. 3d 366, 372.)
“‘[W]here the issue is raised in a marital dissolution action, the trial court must make a
specific finding as to the existence and value of the “goodwill” of a professional business
as a going concern’” even if it involves the business “‘of a sole practitioner . . . .’” (In re
Marriage of Fenton (1982) 134 Cal. App. 3d 451, 460.) As for the nature of a client list,
in Dairy Dale Co. v. Azevedo (1931) 211 Cal. 344, the Supreme Court recognized “[i]t is
settled in this state that the names, addresses and requirements of an employer’s
customers . . . constitute part of the goodwill of the business . . . .” (Id. at p. 345.)
The parties have not cited, nor have we found, a California case on point
concerning whether a licensed professional’s list of clients is an asset subject to division
in a dissolution action. But courts in other jurisdictions have generally held customer
lists of licensed professionals who are employed in a business or industry constitute
divisible marital property. (Moll v. Moll (N.Y.Supr.Ct. 2001) 187 Misc. 2d 770, 775 [722
8
N.Y.S.2d 732] [clients serviced by stockbroker constitute marital asset; “the ‘thing of
value’ is the personal or professional goodwill of a stockbroker or financial advisor”];
Reiss v. Reiss (Fla.Dist.Ct.App. 1995) 654 So. 2d 268, 268-269 [stockbroker’s “signing
bonus” for clients he brought with him to new securities firm is a divisible marital asset];
Niroo v. Niroo (Md.Ct.App. 1988) 313 Md. 226, 234-235 [545 A.2d 35] [insurance
agent’s anticipated renewal commissions on policies sold during marriage “are type of
property interest encompassed within the definition of marital property”]; Pangburn v.
Pangburn (Ariz.Ct.App. 1986) 152 Ariz. 227, 230 [731 P.2d 122] [citing Brown,
insurance agent’s “contractual right to commissions for future renewals . . . earned during
coverture” includable within community estate].)
The record before us is unclear, but in this appeal husband claims, and wife
apparently does not dispute, that she acquired her book of business during their marriage.
Contrary to the trial court’s findings, the terms of the offer summary and the testimony of
the parties’ experts reflect wife’s book of business, i.e. list of clients, was a valuable
asset. The offer summary states the transitional bonus was “based on 150% of your pre-
hire trailing twelve months production, subject to and following verification of pre-hiring
twelve months production of $1,868,631.00 . . . and pre-hire assets of $192,671,911,” and
that “[e]vidence of both assets under management and trailing twelve [month] production
shall be dated within sixty days prior to your date of hire.”
Both Ellis, wife’s securities industry expert, and Buchler, husband’s
securities expert, acknowledged financial advisors are viewed as professionals. In order
to work in the securities industry financial advisors must acquire and maintain one or
more licenses. Wife’s professional credentials include being certified as a financial
planner, an investment management analyst, and a retirement planning counselor.
Buchler testified the securities industry now recognizes a “financial advisor owns [his or
her] book of business.” Both experts agreed that industry protocol allows a financial
9
advisor to take the names of his or her clients, plus their account and telephone numbers
when changing firms.
Ellis described the transitional bonus “as kind of the up-front bonus,” the
purpose of which was “to aid the transition and – basically, if you would, kind of pay for
the book of business as it was coming over.” Buchler agreed wife received the
transitional bonus as compensation for bringing her book of business to Wells Fargo. He
explained the value of a financial advisor’s book of business would “range . . . anywhere
from one to three times the gross . . . commissions generated by the book of business.”
Although claiming wife would have been entitled to “some bonus based on her
[previously demonstrated] production credits, her expertise, and her ability to build
business,” Ellis conceded that without bringing the book of business to Wells Fargo she
likely would not have received a transitional bonus of $2.8 million.
Thus, wife’s book of business was a valuable asset. The evidence reflects
Wells Fargo agreed to pay wife $2.8 million for bringing her customers to the firm. The
difficulty presented is that the transitional bonus was to be paid over several years, but
wife received the entire amount in advance subject to the conditions that she continue to
work as a financial advisor for the firm, maintain a minimum production level, and
remain current on her other obligations to the firm. Wells Fargo enforced these terms by
requiring wife sign a promissory note for the entire amount to be forgiven in monthly
installments over a 9 to 10 year period.
But the fact that wife’s right to receive the bonus is subject to
contingencies does not preclude it from being a divisible community asset. In Brown,
the Supreme Court held “[p]ension rights, whether or not vested, represent a property
interest . . . subject to division in a dissolution proceeding” where “such rights derive
from employment during coverture . . . .” (Brown, supra, 15 Cal.3d at p. 842.) In so
ruling, Brown “reject[ed] th[e] theory” that merely because the right to receive pension
benefits was contingent on the employee spouse’s continued employment the asset could
10
not be deemed a divisible community asset. (Id. at p. 846.) “The fact that a contractual
right is contingent upon future events does not degrade that right to an expectancy.” (Id.
at p. 846, fn. 8.)
Shortly after issuing Brown, the Supreme Court decided In re Marriage
of Fonstein (1976) 17 Cal. 3d 738. Fonstein rejected a spouse’s claim that his contractual
right to withdraw from a law firm constituted “a mere expectancy with no present
value . . . .” (Id. at p. 745.) “[W]ithdrawal rights are analogous to the pension rights
which have been held to be community property when subject only to conditions within
the control of the employee. [Citations.] . . . [C]ontractual rights, where the right to
payment is earned during marriage, are community property though contingent upon
future events.” (Id. at pp. 745-746; see also In re Marriage of Skaden (1977) 19
Cal. 3d 679, 687 [employment contract conditionally granting insurance agent right to
receive post-employment payments based on premiums credited to him before
termination constitute “‘a form of deferred compensation for services rendered[]’”
because “these benefits ‘derived from the terms of the employment contract’”].)
Here, Wells Fargo paid wife, a licensed financial advisor, $2.8 million as
consideration for bringing to the firm clients owning over $192 million in investments
that had produced over $1.8 million in commissions and fees in the prior year. While her
right to retain the entire bonus is contingent on satisfying certain obligations, they are
“conditions within [wife’s] control . . . .” (In re Marriage of Fonstein, supra, 17
Cal.3d at p. 746.)
The trial court’s reliance on In re Marriage of McTiernan & Dubrow,
supra, 133 Cal. App. 4th 1090 was error since that case presented a distinguishable
situation. There the husband was a successful movie director. The trial court held the
husband’s high status within the film industry constituted goodwill, noting he had
“‘developed an earning capacity and reputation in his profession . . . which greatly
11
exceeds that of most persons involved in that profession and that [husband] commands a
premium for his services.’” (Id. at p. 1094.)
After discussing the nature of what constitutes property, including the fact
that “property must be capable of being transferred” (In re Marriage of McTiernan &
Dubrow, supra, 133 Cal.App.4th at p. 1100), the Court of Appeal reversed. “Husband’s
‘earning capacity and reputation in his profession as a motion picture director . . .’ or, in
the trial court’s shorthand, his ‘elite professional standing,’ cannot be sold or transferred.
His high standing among other motion picture directors is entirely personal to him. He
cannot confer on another director his standing . . . . He cannot sell this standing to
another . . . . That standing is his, and his alone, and he cannot bestow it on someone
else. Thus, an essential aspect of a property interest is absent.” (Id. at pp. 1100-1101.)
We do not disagree with the ruling in In re Marriage of McTiernan &
Dubrow, supra, 133 Cal. App. 4th 1090. But, as discussed above, the terms of the offer
summary and expert testimony reflect Wells Fargo did not pay wife the transitional bonus
in return merely for her admittedly high standing in the securities industry. Rather, the
consideration for that bonus was her ability to induce clients with significant assets and
potential for producing future commissions and fees to follow her when moving to the
firm.
The trial court did find the community had an interest in a portion of the
transitional bonus. But it was limited to the payments wife earned during the 11 months
between the date of her hire and the parties’ separation. Based on the foregoing
discussion, we conclude this limited valuation constituted an abuse of discretion. Wife’s
right to receive the bonus, and the obligation to repay it if she failed to satisfy the
attached conditions, arose when she signed the offer summary, received immediate
payment of the bonus, and began working for Wells Fargo. Further, the ability to satisfy
the requirements entitling her to retain the entire bonus is within her control.
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This does not mean the court must simply award one-half of the $2.8
million to husband. As discussed above, wife’s conditional right to retain the entirety of
the transitional bonus and the possibility she may be obligated to repay any unearned
portion of it is similar to the nonvested and unmatured pension right at issue in Brown
and the cases applying its reasoning to other contractually created contingent interests. In
re Marriage of Skaden, supra, 19 Cal. 3d 679 noted “Brown . . . indicated [there were]
two basic solutions” to the division of a community’s interest in a contingent benefit. (Id.
at p. 688.) “[F]irst, a determination by the trial court of the present value of the rights or
[obligations] adjudged to be marital property [or liability] and an equal division or
adjustment of the same [citations][,] and second, ‘if the court concludes that because of
uncertainties affecting the vesting or maturation of [such] rights . . . it should not attempt
to divide the present value . . . it can instead award [or confirm to] each spouse an
appropriate portion of each . . . payment [or obligation] as it is paid [or incurred].’”
(Ibid.)
Skaden further held “that in cases of this kind the matter of the proper
division of rights [or obligations] . . . as marital property [or liability] should be left to the
sound discretion of the trial court, exercised in light of the particular circumstances of the
case.” (In re Marriage of Skaden, supra, 19 Cal.3d at p. 688.) Thus, in this case we will
remand the matter to the trial court to determine the extent of the community interest or
obligation in the transitional bonus and to decide the appropriate option of dividing or
appropriating it.
3. The Other Bonuses
The trial court ruled the first production bonus and level 4front bonus
constituted wife’s separate property and confirmed the entire amount of each payment to
her. The court made no finding on the deferred recruitment bonus, but noted wife would
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not be eligible to receive it until 2016 and then only if she is still employed by Wells
Fargo.
Husband argues these bonuses “were not compensation for future
employment,” but “for the book built up during marriage.” He claims wife’s post-
separation salary fully compensated her for the obligations of remaining a Wells Fargo
financial advisor in good standing and maintaining a specific production level. Wife
asserts she “must continue to work and perform at a specified level in order to receive the
benefits contracted for during marriage,” and thus “[t]he bonuses paid to [her]” constitute
“unearned income until the condition[s are] met.”
We reject husband’s argument concerning these bonuses. It is supported
only by Buchler’s testimony. Ellis, wife’s securities expert, testified the consideration for
wife’s book of business was the transitional bonus. His testimony supports the trial
court’s rejection of husband’s claim and, as noted, we must accept the trial court express
and implied factual findings when supported by the evidence. (In re Marriage of Rossin,
supra, 172 Cal.App.4th at p. 734.)
Furthermore, as for the deferred recruitment award, the offer summary
provided wife’s right to receive would “vest on January 31, 2016 . . . provided [she]
remain[ed] actively employed with [Wells Fargo] . . . .” But, with certain exceptions,
“[i]n the event that [wife’s] employment is terminated by [her] or [Wells Fargo] for any
reason whatsoever prior to the [v]esting [d]ate, [wife] agree[d] that [she] will not be
entitled to any portion of the ‘[d]eferred [r]ecruitment [a]ward . . . .” Thus, while the
offer summary provides for wife’s receipt of a deferred recruitment bonus unless she
remains a Wells Fargo employee until January 31, 2016, she will not be entitled to
receive this payment. We conclude this bonus constitutes only an expectancy because
prior to the vesting date wife “has no enforceable right” to receive it. (In re Marriage of
Brown, supra, 15 Cal.3d at p. 845.)
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Nonetheless, much of our prior discussion concerning the characterization
of the transitional bonus is also applicable to the first production bonus and the level
4front bonus. The critical question here is when wife’s right to each bonus accrued, not
her receipt of them. “What is determinative is . . . a single concrete fact—time. The right
to [employment] benefits ‘represent[s] a property interest; to the extent that such [a]
right[] derive[s] from employment’ during marriage before separation, it ‘comprise[s] a
community asset . . . .’” (In re Marriage of Lehman, supra, 18 Cal.4th at p. 177.)
The first production bonus was provided for in the offer summary. Wells
Fargo announced the creation of the level 4front bonus in mid-2009, before the parties
separated. Wife did not receive payment for either bonus until after separation. But the
contractual right to receive each bonus and at least some of the effort necessary to qualify
for them occurred before the couple separated.
The trial court’s reliance on In re Marriage of Doherty, supra, 103
Cal. App. 4th 895 and Garfein v. Garfein, supra, 16 Cal. App. 3d 155 lacks merit. In
Doherty, the wife’s employer transferred her job to California and, to assist the family in
making the cross-country move, “offered relocation housing benefits . . . [which]
included . . . a ‘mortgage buydown’ or subsidy payable directly to a specified lender over
20 years.” (In re Marriage of Doherty, supra, 103 Cal.App.4th at p. 897.) Two years
later, the couple separated and divorced. The trial court characterized the entire mortgage
subsidy as a community asset, describing it as “‘a contract right that was received during
the marriage, from the efforts of the community.’” (Id. at p. 898.) The Court of Appeal
disagreed, holding there was “no community interest in the . . . mortgage subsidy
received after the parties’ separation.” (Id. at p. 900.) “The mortgage subsidy . . . rests
upon [the wife’s] continued employment with [her employer] . . . and [the employer’s]
desire to continue paying the relocation benefit until its policy is ‘changed or revoked.’”
(Id. at p. 899.) Thus, “[t]he housing allowance . . . is a form of supplemental income to
[the wife] and her separate property after separation.” (Ibid.)
15
Garfein involved a divorce action where during marriage the wife, a movie
actress, entered into a six-year “‘play or pay’ contract” with a studio. (Garfein v.
Garfein, supra, 16 Cal.App.3d at p. 157.) Under the agreement, the studio promised to
pay her a specified sum of money each year in return for her promise to remain available
to make at least one picture. Two years later the couple separated, but the husband
argued he was entitled to one-half of the monies wife received during the remaining four
years of her contract. The Court of Appeal disagreed. “[A]ppearance in a picture was
only one alternative of her obligations to her employer under the contract. . . . We hold
that the wife ‘earns’ her agreed compensation by refraining from performing for anyone
except the employer during the period of the contract, unless with the employer’s
consent. Since the payments made after [separation] were ‘earned’ after that date, they
were separate property.” (Id. at p. 159, fns. omitted.)
As noted, unlike Doherty and Garfein, wife’s right to the first production
and level 4front bonuses was earned, at least in part, before the parties separated. But as
with the transitional bonus, she received the entire bonus in a lump-sum payment subject
to certain conditions. Thus, upon remand the trial court must make a determination of the
portion of each bonus earned before separation and evaluate the potential wife may fail to
satisfy the conditions required to retain the advances received by her. The court will then
need to choose the appropriate option of dividing or confirming the community’s interest
or liability in each bonus.
In wife’s brief, she notes the trial court’s awards of child and spousal
support to husband were based on a calculation of her monthly income that included the
transitional bonus income credited to her. She expresses the concern that if husband
prevails in this appeal he would be allowed to “double-dip[]” by “receiv[ing]” both her
“post-separation earnings as property and support.” However, the trial court’s judgment
dealt with both the division of the parties’ assets and obligations, plus child and spousal
support. Since we are reversing the judgment for further proceedings, the trial court will
16
be able to adjust not only its division of the parties’ community estate, but also the
support obligations. Thus, at this time, the potential for “double-dipping” is speculative.
DISPOSITION
The judgment is reversed and the matter is remanded to the superior court
for further proceedings consistent with the views expressed in this opinion. Appellant
shall recover his costs on appeal.
RYLAARSDAM, J.
WE CONCUR:
O’LEARY, P. J.
IKOLA, J.
17
Filed 1/7/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
In re the Marriage of MARK and
RHONDA FINBY.
MARK FINBY,
G046814
Appellant,
(Super. Ct. No. 10D004955)
v.
ORDER CERTIFYING OPINION FOR
RHONDA FINBY, PUBLICATION; DENYING
REHEARING
Respondent.
The opinion in the above-entitled matter filed on December 18, 2013, was
not certified for publication. Requests have been received to publish the opinion and it
appears the opinion meets the standards for publication set forth in California Rules of
Court, rule 8.1105(c). The requests are GRANTED.
The petitions for rehearing are DENIED.
CERTIFIED FOR PUBLICATION
RYLAARSDAM, J.
WE CONCUR:
O’LEARY, P. J.
IKOLA, J.
2