Marriage of Smith

Filed 6/19/07 Marriage of Smith CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

APPEAL from a judgment of the Superior Court of Los Angeles County, Reva G. Goetz, Commissioner. Affirmed.

James S. Link; The Law Offices of Alexander E. Macksound and Alexander E. Macksound for Appellant.

Lipton & Margolin and Hugh A. Lipton; Law Firm of Ronald W. Saxman and Ronald W. Saxman for Respondent.

_____________________________________

Desiree E. Smith appeals from the judgment entered in this marital dissolution action, contending there is insufficient evidence supporting the valuation of her former husbands business and his separate property interest in that business and the trial court abused its discretion in denying her request for attorney fees. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On December 5, 2003 Desiree[1]filed a petition for dissolution of her marriage to Darryl E. Smith, a camera operator. After six days of trial spread over approximately 10 months, the trial court adopted the findings contained in the report prepared by Darryls forensic accountant, Jack Zuckerman, and determined the value of Darryls camera operation and lighting business as of the date of separation to be $201,000 and his separate property interest in the business as of that date to be $46,823, leaving a community property interest of $154,144. Zuckerman valued the business using the adjusted cost method:[2] He determined the fair market value of the businesss assets, including camera and lighting equipment valued at $48,143, and added $22,000 for goodwill, calculated using the excess earnings approach. Zuckerman did not independently appraise the camera and lighting equipment. Rather, he relied on a schedule prepared by Darryl providing retail prices Darryl had located on the internet and the prices a buyer and seller of broadcast equipment, John Cipoletti, would pay for the equipment for resale given its age. Zuckerman then used the midpoint between these two values to determine the fair market value.

Zuckerman valued Darryls separate property interest in the business by taking Darryls estimate of the value of the equipment he stated he owned as of the date of marriage, $30,000, and adding to that a return on investment using the interest rate for AAA bonds through the date of separation.

The trial court rejected as overstated the $489,000 business valuation offered by Desirees forensic accountant, Ron Anfunso. Anfunso had determined the fair market value of the camera and lighting equipment as $251,867 based on a list Darryl prepared in connection with obtaining an all-risk, replacement cost insurance policy for the businesss equipment. The court found (incorrectly[3]) Anfunso had improperly included in the equipment to be valued a $130,000 high definition camera purchased by Darryl after the date of separation and had failed to adjust the replacement cost used to determine fair market value for depreciation or out-of-service equipment. The court also found, because the value of the camera and lighting equipment was overstated, the goodwill calculation predicated in part on the value of that equipment was likewise overstated.[4]

As part of the judgment of dissolution, the court ordered Darryl to pay Desiree $77,072, one-half the community property interest in Darryls business. The court also ordered Darryl to pay spousal support, but denied Desirees request that Darryl pay a share of her attorney fees incurred in the dissolution proceeding. The court concluded Darryl did not have cash available after his payment of spousal support was taken into consideration and did not have any assets from which the court could order him to make payment.

CONTENTIONS

Desiree contends the trial court erred in rejecting Anfunsos valuation of Darryls business because it was based on the erroneous finding Anfunso had included a $130,000 camera in the valuation of the camera and lighting equipment; insufficient evidence supports the valuation of Darryls separate property interest in the business because it was based on Darryls unsubstantiated hearsay statement the value of the equipment he owned as of the date of marriage was $30,000; and the trial court abused its discretion in denying Desirees request for attorney fees because the courts finding Darryl has no available cash flow was not supported by substantial evidence.

DISCUSSION

1. Substantial Evidence Supports the Valuation of Darryls Business

The trial court possesses broad discretion to determine the value of community assets as long as its determination is within the range of the evidence presented. (In re Marriage of Cream (1993) 13 Cal.App.4th 81, 88.) We will uphold the trial courts valuation if supported by any substantial evidence, even if contradicted, in the record.[5] (In re Marriage of Micalizio (1988) 199 Cal.App.3d 662, 673; In re Marriage of Kahan (1985) 174 Cal.App.3d 63, 66.) Substantial evidence in this regard is any evidence which is not unbelievable per se. (In re Marriage of Kahan, at p. 66.) [R]esolution of conflicts in the evidence, assessment of the credibility of the witnesses and the weight to be given the opinions of the experts [are] all matters within the exclusive province of the trier of fact. [Citation.] (In re Marriage of Ackerman (2006) 146 Cal.App.4th 191, 204.)

Although we are troubled by Desirees failure to raise the trial courts erroneous finding in her objections to the courts tentative statement of decision ‑‑ an issue that could have clearly been addressed and resolved by the trial court (cf. In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1138 [it would be unfair to allow counsel to lull the trial court and opposing counsel into believing the statement of decision was acceptable, and thereafter to take advantage of an error on appeal although it could have been corrected at trial]) ‑‑ we nonetheless have reviewed the record and find substantial evidence to support the trial courts adoption of Zuckermans valuation of the business notwithstanding the courts error regarding the recently acquired, high definition camera.

We limit our discussion to the fair market valuation of the camera and lighting equipment (as does Desiree) inasmuch as that is the main component of the disputed business valuation. Neither Zuckerman nor Anfunso made an independent appraisal of the equipment. Zuckerman based his fair market valuation on the retail prices supplied to him by Darryl, including his review of supporting internet documentation and invoices, and the price information provided by Cipoletti, who also testified at trial, as to what a dealer of used camera equipment would pay to purchase the equipment for resale. Taking the midpoint between these values, which were supported by credible evidence, was a reasonable means of determining the fair market value of the equipment in light of its age and condition. (See In re Marriage of Cream, supra, 13 Cal.App.4th at p. 89 [the fair market value of a marketable asset in marital dissolution cases is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no obligation or urgent necessity to do so, and a buyer, being ready, willing and able to buy but under no particular necessity for so doing].)

In contrast, Anfunso admittedly departed from the textbook definition of fair market value and used replacement cost as determined by Darryl for insurance purposes. Pressed as to his rationale for this departure, Anfunso could not offer any plausible explanation other than he had seen appraisers do this in other cases.[6] The trial courts conclusion Anfunsos valuation was not credible because it failed to reflect any depreciation for the used equipment ‑‑ one method for considering the age and condition of tangible assets that would affect the price a buyer would be willing to pay ‑‑ was well-founded notwithstanding the courts error in concluding the valuation was also flawed because it included the $130,000 camera. (Cf. Evid. Code, 820 [authorizing valuation expert to rely on replacement or reproduction cost less depreciation or obsolescence].)

Desirees additional contention on appeal Darryls business is not marketable, therefore a method other than fair market value was necessary to establish its value, is not supported by any citation to the record. (Guthrey v. State of California(1998) 63 Cal.App.4th 1108, 1115 [It is the duty of counsel to refer the reviewing court to the portion of the record which supports appellants contentions on appeal. [Citation.] If no citation is furnished on a particular point, the court may treat it as waived.].) Moreover, whether the business as a whole is a marketable asset is a different question from whether the camera and lighting equipment itself is marketable. Cipolettis testimony established there is a resale market for the equipment.

2. Substantial Evidence Supports the Valuation of Darryls Separate Property Interest in the Business

As Desiree concedes, expert witnesses may rely on hearsay in formulating their opinions. (Evid. Code, 801.) Nevertheless, Desiree contends insufficient evidence supports the valuation of Darryls separate property interest in the business because Darryl did not testify at trial that he owned $30,000 worth of equipment at the date of marriage, as he told Zuckerman.

Desirees argument is wholly without merit. [A]n expert may base his opinion upon information that is itself not in evidence, such as a written inadmissible extrajudicial admission. (People v. Mazoros (1977) 76 Cal.App.3d 32, 44; In re Fields (1990) 51 Cal.3d 1063, 1070 [expert witness . . . may base an opinion on reliable hearsay, including out-of-court declarations of other persons].) As the owner of the equipment, Darryl may properly opine as to its value (Evid. Code, 813, subd. (a)(2); see Resort Video, Ltd. v. Laser Video, Inc. (1995) 35 Cal.App.4th 1679, 1700 [owner may provide opinion of value of personal property]); Zuckermans reliance on that opinion in determining his own opinion as to the value of Darryls separate property as of the date of separation was not unreasonable. (See Evid. Code, 814 [The opinion of the witness as to the value of property is limited to such an opinion as is based on matter . . . made known to the witness at or before the hearing, whether or not admissible, that is of a type that reasonably may be relied upon by an expert in forming an opinion as to the value of property . . . .].)

Pacific Gas & Electric Co.v. Zuckerman (1987) 189 Cal.App.3d 1113 is not, as Desiree contends, clear authority establishing that Zuckermans opinion was properly considered by the trial court only if Darryl himself testified at trial as to the equipments value. The Zuckerman court stated, Where an expert bases his conclusion upon assumptions which are not supported by the record, upon matters which are not reasonably relied upon by other experts, or upon factors which are speculative, remote or conjectural, then his conclusion has no evidentiary value. [Citations.] In those circumstances the experts opinion cannot rise to the dignity of substantial evidence. [Citation.] When a trial court has accepted an experts ultimate conclusion without critical consideration of his reasoning, and it appears the conclusion was based upon improper or unwarranted matters, then the judgment must be reversed for lack of substantial evidence. (Id. at pp. 1135-1136.) To read the courts reference to assumptions which are not supported by the record as a prohibition on expert testimony based on any information, however reliable, not subsequently admitted into evidence would render meaningless Evidence Code section 801, subdivision (b)s express mandate that expert opinion may be [b]ased on matter . . . perceived by or personally known to the witness or made known to him at or before the hearing, whether or not admissible, that is of a type that reasonably may be relied upon by an expert in forming an opinion upon the subject to which his testimony relates . . . . (See also Evid. Code, 814 [expert opinions to value of property may be based on information made known to witness before trial].) Like Desirees citation to Pacific Palisades Assn. v. Menninger (1933) 219 Cal. 257, Pacific Gas & Electric Co.v. Zuckerman,supra, 189 Cal.App.3d 1113, represents an exception to the general rules governing deference to the trial court. (Pacific Gas & Electric Co., at p. 1136 [We find this to be a case in which an appellate court cannot defer to the trial courts traditional role in drawing inferences and resolving conflicts in the evidence].) No such exception is warranted on this record.

3. The Trial Court Did Not Abuse Its Discretion in Denying Desirees Request for Attorney Fees

In a dissolution of marriage proceeding, [w]hether one party shall be ordered to pay attorneys fees and costs for another party, and what amount shall be paid, shall be determined based upon, (A) the respective incomes and needs of the parties, and (B) any factors affecting the parties respective abilities to pay. (Fam. Code, 2030, subd. (a)(2); In re Marriage of Sullivan (1984) 37 Cal.3d 762, 768 [In making its determination as to whether or not attorney fees and costs should be awarded, the trial court considers the respective needs and incomes of the parties. [Citations.] Further, the trial court is not restricted in its assessment of ability to pay to a consideration of salary alone, but may consider all the evidence concerning the parties income, assets and abilities.] [A] motion for attorney fees and costs in a dissolution proceeding is left to the sound discretion of the trial court. [Citations.] In the absence of a clear showing of abuse, its determination will not be disturbed on appeal. [Citations.] [T]he trial courts order will be overturned only if, considering all the evidence viewed most favorably in support of its order, no judge could reasonably make the order made. [Citations.] [Citation.] (Id., at pp. 768 -769.) However, although the trial court has considerable discretion in fashioning a need-based fee award [citation], the record must reflect that the trial court actually exercised that discretion, and considered the statutory factors in exercising that discretion. (In re Marriage of Braud  (1996) 45 Cal.App.4th 797, 827.)

Desiree contends insufficient evidence supports the trial courts finding Darryl has no available cash flow from which to contribute to Desirees attorney fees. Desiree observes the trial court found Darryls income was $9,140 per month and his mortgage and taxes were $2,461, leaving approximately $6,600 per month from which he could contribute to her attorney fees.

Desirees argument fails to take into consideration Darryls $2,000 monthly spousal support obligation and the $1,000 per month increase in his monthly mortgage payment as a result of his need to refinance their former family home to pay her $207,000 for her community interest in that home. Desiree also ignores the fact that Darryl has monthly living expenses in addition to payment of mortgage and taxes. The declarations submitted by Darryl and his attorney in connection with the parties separate briefing on the question of attorney fees, which set out Darryls monthly expenses, viewed most favorably to support the trial courts judgment, are substantial evidence supporting the courts finding Darryl does not have sufficient cash to contribute to Desirees attorney fees.

DISPOSITION

The judgment is affirmed. Darryl E. Smith is to recover his costs on appeal.[7]

NOT TO BE PUBLISHED IN THE OFFFICIAL REPORTS

PERLUSS, P. J.

We concur:

JOHNSON, J.

WOODS, J.

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Analysis and review provided by Chula Vista Property line attorney.

[1] As is customary in family law proceedings, we refer to the parties by their first names, not out of disrespect, but for clarity and convenience. (See Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1136, fn. 1.)

[2] In her brief on appeal Desiree asserts she agreed with this methodology, but not the valuation determined by Zuckerman.

[3] Darryl does not dispute the trial court erred in finding Anfunso had included the $130,000 camera in his valuation.

[4] In its findings the court stated, The court could not adopt the findings contained in [Desirees] forensic accountants report . . . due to the fact that certain of the findings were not explained or supported by factual information to support them, specifically: [] a. The use of replacement value to establish the value of the Property and Equipment based on two factors: [] i. [Darryl] testified that the stated replacement value used by [Desirees] experts included a hi-definition camera he purchased subsequent to the Date of Separation for $130,000 and therefore, is overstated, and [] ii. The replacement value as stated does not include any adjustment for depreciation or out of service equipment that is included on [the] equipment list. [] Based on the overstatement of equipment, the Goodwill calculation is impacted. Therefore, the court relies on [Darryls] forensic experts report.

[5] Quoting from Pacific Palisades Assn. v. Menninger (1933) 219 Cal. 257, Desiree contends the appropriate standard of review is abuse of discretion because the substantial evidence standard has no application when the finding in question is totally unsupported by the evidence, and when the evidence, read as a whole, is directly contrary to the finding. (Id. at p. 267.) Although Desiree is correct the trial courts finding Anfunso included the $130,000 camera in his valuation of the camera and lighting equipment is unsupported by the record, this was not the sole basis for the rejection of Anfunsos valuation: The trial court disregarded Anfunsos valuation because he failed to consider depreciation in determining the fair market value of the camera and lighting equipment. Thus, this record is readily distinguishable from Pacific Palisades Association in which the challenged findings are not supported by the evidence, and . . . there can be but one interpretation of the evidence. (Ibid.) Moreover, the issue is not, as Desiree has framed it, whether substantial evidence supports the trial courts rejection of Anfunsos valuation, but whether substantial evidence supports the valuation adopted by the court. (See DAmico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 19 [No rule of decision is better or more firmly established by authority, nor one resting upon a sounder basis of reason and propriety, than that a ruling or decision, itself correct in law, will not be disturbed on appeal merely because given for a wrong reason].)

[6] Anfunso testified, Well, my basis is my experience working on these types of cases, many of the cases where theres adequate funds available, we actually have people come in that are experts in appraising equipment. Ive looked at how they look at it, what they look at, how they appraise it. And based on my experience, what Mr. Smith listed as the values more appropriately reflects what you would get if you had an appraisal. Do I know that for sure? Obviously not because I dont have one of those appraisals. But this is a more appropriate method and value than looking at some type of thing on the internet for used equipment that was used by Mr. Smith and Mr. Zuckerman.

[7] Although we agree Desiree failed to include significant documents in her appendix on appeal, including Darryls and his counsels declarations in connection with the briefing on attorneys fees, we deny Darryls request for sanctions under California Rules of Court, rule 8.124(g) (formerly rule 5.1(g)).