GRéaux v. Mermin (In re GRéaux)

• Decision Date: 14 February 2014
• Docket Number: A134662
• Citation: 167 Cal.Rptr.3d 881,223 Cal.App.4th 1242
• Court: California Court of Appeals Court of Appeals
• Parties: IN RE the MARRIAGE OF Jacqueline GRÉAUX AND Tristan MERMIN. Jacqueline Gréaux, Appellant, v. Tristan Mermin, Respondent.

223 Cal.App.4th 1242

167 Cal.Rptr.3d 881

IN RE the MARRIAGE OF Jacqueline GRÉAUX AND Tristan MERMIN.Jacqueline Gréaux, Appellant,

v.Tristan Mermin, Respondent.

A134662

Court of Appeal, First District, Division 4, California.

Filed February 14, 2014

See 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 579 et seq.

Marin County, Hon. Randolph E. Heubach. (Marin County Super. Ct. No. FL094470)

Jacqueline Gréaux, in propria persona, for Appellant

Law offices of Cecilia D. Lannon, Cecilia D. Lannon, San Rafael, for Respondent

Weixel Law Office, James V. Weixel, for Respondent

Rivera, J.

In a divorce proceeding, the court awarded the community business to the husband and issued an order restraining the wife from working in the same business, anywhere, for five years. Business and Professions Code section 16600¹ renders void any agreement that restrains an individual from engaging in a lawful occupation or enterprise except as otherwise provided by statute. Two questions are posed in this appeal: Whether the statute prohibits the issuance of the noncompetition order, and, if not, whether the court's order in this case was nonetheless invalid.

We hold that section 16600 does not prohibit the issuance of a noncompetition order. However, the state's policy favoring an individual's right freely to practice his or her chosen trade or profession requires that any such restrictions be based upon evidence showing they are reasonably necessary to preserve the value of the asset awarded in the division of marital property. In this case, there appears to be no basis for the order's broad geographic restriction. Accordingly, we reverse and remand.

I. PROCEDURAL HISTORY

The issue presented on appeal is a narrow one, so we need not recite the lengthy procedural background of this matter. In brief, this dissolution action was filed by Jacqueline Gréaux (wife) in 2009, and proceeded to a six-day trial over a period of three months in 2011. It appears from the court's statement of decision that the only contested issues at trial were (1) the disposition and value of two community property businesses, and (2) spousal support. The parties did not provide any record of the trial, presumably because they do not dispute any of the court's factual findings. Nor does wife, the appellant here, seek to overturn any of the court's orders providing for the disposition and valuation of the community assets. Accordingly, we shall summarize the court's findings on those matters and then proceed to the legal issue at the heart of this appeal.

Tristan Mermin (husband) and wife owned and operated two businesses, Specialty Application and Finishes (SAF) and Saint Bart's Spirit Company (SBSC). At the request of the parties, SAF was assigned a zero value and awarded to husband. After consideration of all applicable factors, the court declined to award spousal support to either party. The primary dispute related to SBSC.

SBSC was created from the parties' joint efforts during the marriage, and therefore was community property. The business of SBSC was to formulate and market a particular type of spirits called “ rhum agricole.” “Both parties brought unique talents to SBSC.”

Although husband had little formal education or training in business, his “considerable drive, energy and determination were crucial to SBSC's launch and its progress as a functioning business.” It was husband who marshaled the support and services of others “whose experience and contacts were invaluable to the startup company[,] and his own business skill advanced with the company's development.”

Wife possessed “natural sales and marketing skills that enabled the business to make a mark at the retail level as a potentially successful product in the competitive retail market.” It was also wife's family contacts in the Caribbean that gave rise to the business, and her grandfather's experiences as a merchant seaman—including his nickname “Batiste”—that “was fashioned as the product's original ‘brand story.’ ” Wife also had “an impressive understanding of the production techniques and the unique nature and characteristics of rhum agricole,” as well as a discerning palate which qualified her to be an “official industry ‘taster.’ ” “SBSC could not have found a more suitable ‘brand ambassador’ [as s]he was quite literally ‘the face of the brand,’ as stated in one of the company's investment prospectuses.”

The parties contributed a great deal of hard work to launch the company. Wife achieved “remarkable” sales accomplishments (she secured all of the company's retail accounts). Husband set up the company, arranged for “the product's development, production, transportation, distribution, [and] introduction to the broader market, and [ ] attract[ed] the capital necessary to convert a business idea into an operational enterprise.” Although wife “participated in some of those activities and made some significant contributions along the way, [ ] her involvement was not the impetus that drove the business'[s] ‘launch.’ ”

The parties, however, had personal conflicts that took their “inevitable toll on the business itself[ ] [e]ven during the company's earliest, most formative days.” We need not delve into the details of these conflicts as recited by the court, but at some point it became clear the marriage would not survive, and wife filed a petition for dissolution. Worse for SBSC, wife filed concurrent actions against SAF and SBSC, and lawsuits against key SBSC resource contacts. Wife also disrupted the business operations of SBSC by withdrawing operating capital on two occasions and making statements to employees “portending the demise of the businesses.”

In the lawsuits, wife sought to dissolve SAF and SBSC, assailed the personal integrity of individuals associated with SBSC, and “substantially compromise [ed] the company's ability to attract essential capital.” She alleged that SBSC was “ ‘insolvent or in imminent danger of becoming insolvent,’ ” and accused product suppliers, corporate officers and corporate counsel of fraud and conspiracy. “Although she ultimately dismissed all of those actions, considerable harm had already been done.”

At trial, wife offered evidence indicating that husband's “efforts to run SBSC post-separation were less than exemplary,” but ignored her own part in taking actions aimed at destroying both the business and the reputations of persons “upon whom and whose good will SBSC's future depended.” Ultimately, wife acknowledged that “had she considered it [when she filed the actions] she could not have failed to perceive their debilitating effects on the business....”

Wife asked the court to award the business to her at zero value, arguing that husband had “ ‘run SBSC into the ground,’ ” and citing an expert's opinion that the company was essentially a business shell. The court took issue with wife's characterization of the expert's testimony. According to the court, the expert testified that “although the company had never earned a profit, had no good will and a negative book value, [ ] it had what he termed ‘in-place value,’ consisting of ‘[in-place] contracts to distill and distribute coupled with the beginning production and distribution channels,’ which he speculated ‘probably has some value attached for purposes of division of community property.’ And, while it was ‘not a part of [his] regular valuation practice to value the worth of such contracts,’ he nevertheless ventured the opinion that SBSC's ‘in-place value’ ... was approximately $49,000.” Although the court was skeptical about the expert's testimony because “it sounded almost as if he were attempting to capitalize SBSC's sentimental value,” it nevertheless accepted “the company's dubious $49,000 ‘in-place value’ as a going concern” because it was more than offset by husband's post-separation investments of time and money—valued by the expert between $43,750 and $70,000—which was the only reason SBSC “might still have any hope of survival at all.”

The court awarded SBSC to husband. It found that, while wife had an “exceptional aptitude for marketing and sales” due to her “engaging personality,” husband was “better qualified by experience to run the business.” Further, husband had “demonstrated the will and ability to [run the business] under extremely adverse circumstances,” while wife had shown “a willingness to sacrifice the interests of SBSC for what appeared to have been little more than spiteful retribution.”

In its intended decision, the court stated: “[Wife] shall be ordered to surrender all of her stock shares to the corporation and to execute all documents and perform all acts necessary to effectuate the order. [Wife] shall refrain from further conduct intended or likely to damage either business in any way and shall be subject to a five-year non-competition order.” All assets and obligations of SBSC were assigned to husband.

Husband prepared a proposed statement of decision and a proposed judgment, to which wife filed objections.² The proposed judgment included far more detailed language than that contained in the intended statement of decision concerning the restraints to be imposed upon wife post-dissolution. Specifically, husband proposed that wife be restrained and enjoined from: (1) contacting or communicating with “any person or entity in the SBSC/Batiste infrastructure” including its growers, distillers, shippers, bottlers, distributors, attorneys, employees, consultants, customers “or other persons doing business with SBSC[;]” (2) holding herself out as a representative of SBSC or of the brand Batiste; (3) holding herself out as having any connection or involvement with SBSC or Batiste rum; and (4) entering the premises of SBSC or dealing with the books, bank accounts and records of SBSC.

Husband also proposed that wife be “restrained and enjoined from competing with [husband] or SBSC for a period [of] five years from entry of judgment herein. She shall not...