Lasalvia v. Lasalvia (In re Lasalvia)
| Decision Date | 06 February 2018 |
| Docket Number | F074023 |
| Court | California Court of Appeals Court of Appeals |
| Parties | In re the Marriage of STEVEN J. LASALVIA and JOAN FALASCO LASALVIA. STEVEN J. LASALVIA, Appellant, v. JOAN FALASCO LASALVIA, Respondent. |
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
OPINIONAPPEAL from a judgment of the Superior Court of Merced County. Brian L. McCabe, Judge.
Law Offices of Russell J. Hanlon and Russell J. Hanlon for Appellant.
Law Offices of Katherine E. Donovan and Katherine E. Donovan for Respondent.
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I. INTRODUCTION
Petitioner Steven J. LaSalvia (husband) and respondent Joan Falasco LaSalvia (wife) divorced after 34 years of marriage. Husband appeals from the judgment, challenging the court's distribution of assets and award of permanent spousal support. Husband raised four major issues on appeal. Husband inherited significant ownership in Los Banos Abattoir (LBA), and became chief executive officer (CEO) of the company upon the death of his father in 1986. After a lengthy trial, including opinions from the parties' respective expert witnesses, the trial court found that husband was undercompensated during the marriage by LBA in the amount of $912,000,1 and provided wife her community interest share of the undercompensated wages. Husband challenges the court's finding that he was undercompensated. He also contends the court erred in finding that he should have received $832,000 in trustee fees for his efforts in managing three trusts that held his family's farming interests and awarding wife her resulting community interest share to the additional fees. Next, husband alleges, and wife concedes, that the trial court made several mathematical errors in dividing the community property assets. Lastly, husband challenges the court's award of $29,500 in monthly permanent spousal support to wife.
II. BACKGROUND
Husband and wife were married from January 10, 1976, until their separation on May 12, 2010. During the marriage, wife was not employed outside the home, but raised the couple's four children. The couple maintained a high standard of living during the marriage. The family residence was over 5,000 square feet, and they owned a vacation house in Santa Cruz, California. They traveled frequently, both domestically andinternationally. As described post, the couple derived income from various business interests and assets.
Husband's primary employment during the marriage was as CEO of LBA, a slaughterhouse located in Los Banos, California. Husband's father owned and operated LBA starting in 1950. Husband learned how to run and operate the slaughterhouse from his father. Upon graduation from college, husband acquired 50 percent ownership of LBA and started working as vice president of the company. After husband's father died in 1986, the remaining 50 percent of the LBA stock was distributed to husband's family through trusts—28 percent of the stock in a survivor's trust for the benefit of husband's mother and the remaining 22 percent in an exemption trust for the benefit of husband and his sisters. Husband took over as CEO of LBA and remained so throughout the remainder of the marriage. Husband's duties and responsibilities changed upon becoming CEO and records reflect that he was working 16-18 hours a day and doing the work of two men. From 1976 to 2010, LBA's annual sales ranged between $4 to $13 million a year.
Three trusts were created upon the death of husband's father. Half of his father's estate went into a survivor's trust for the benefit of husband's mother. The survivor's trust consisted of 28 percent of the stock of LBA and interest in several parcels of real property. The other half of the estate went into an exemption trust and a marital deduction trust.2 The exemption trust contained the remaining 22 percent of the stock of LBA and a 114-acre parcel of farmland referred to as "Lovers Lane." Husband and his sisters were the beneficiaries of the exemption trust. As a trustee, husband oversaw theexchange of the Lover's Lane property for interests in two other properties in 2008. At the time of the exchange in 2008, the Lover's Lane property was valued at $8.9 million. Prior to its sale, the trustees received income from the Lover's Lane property by renting it to Smith Farming, which farmed the property until its sale in 2008.
Husband served as co-trustee of all three trusts with his mother. The terms of the trusts entitled the trustees to reasonable compensation for all services rendered in administering the trusts. Although husband and his mother were entitled to reasonable administrative fees, husband justified not collecting fees in light of the fact that his sisters were upset that they were not also named as trustees.
Husband and wife started two businesses during their marriage, LaSalvia Enterprises, Inc. (LEI) and LaS, LLC. LEI was formed to process and sell animal byproducts created as a result of the operations of LBA. The sales of the byproducts from LEI benefited husband and wife exclusively as, at the time, husband's mother and sisters had ownership interests in LBA. LEI set up a laboratory to isolate blood serum and obtained rennet from calf blood and gullets.3 In addition, LEI owned two residential properties, a four-acre ranch and various farming interests. Wife also obtained medical insurance through LEI.
Husband and wife formed a second business, LaS, LLC, which purchased a 190-acre parcel of land for $1 million. LaS, LLC sold the water rights to the parcel for $778,000. It then sold 120 of the 190 acres and used the profit of the sale to purchase a vacation home in Santa Cruz, California. The remaining 70 acres were owned by Pacheco Partners, a partnership of LaS, LLC and Larry Anderson. However LaS, LLC had a majority 86 percent interest in the partnership.
Husband filed a petition for dissolution on May 28, 2010. On May 18, 2011, the court ordered husband to pay wife temporary monthly spousal support in the amount of $17,227 a month.
In a bifurcated trial, the court addressed the issue as to whether a February 12, 1991, agreement entered into by the parties titled "Community Property Declaration" served to transmute husband's separate property interests into community property. However, the court found that the agreement did not contain language that clearly and unambiguously established the intent to change the characterization of husband's ownership in his separate property, and that it could not consider the "abundant" extrinsic evidence of husband's intent to change the character of his separate property business interests. The court, therefore, found the transmutation agreement invalid. There is no challenge to this finding or conclusion on appeal.
The second phase of trial was held in November and December 2015, addressing the distribution of assets and payment of permanent spousal support.
The parties made several stipulations during the trial. These included stipulating to the value of several parcels of real property. The parties agreed that husband should be reimbursed for certain separate property contributions, and that husband be confirmed with the business interests of LEI and LaS, LLC, subject to the equal division of the sale of real property interests held by the businesses.
Of significant importance to the present appeal, the parties stipulated to use the apportionment approach set forth in Van Camp v. Van Camp (1921) 53 Cal.App. 17, 27-28 (Van Camp) to determine any community property interest in LBA. As described further below, under Van Camp the court is "'to determine the reasonable value of thehusband's services ..., allocate that amount as community property, and treat the balance as separate property attributable to the normal earnings of the [separate estate].'" (Beam v. Bank of America (1971) 6 Cal.3d 12, 18 (Beam).) (See stipulations regarding division of community property assets below.)
At trial, six witnesses appeared before the court including husband, wife and several valuation experts. The trial court noted that it "found the parties' expert witnesses to be credible" despite use of competing methodologies and approaches that led to differing results. As results differed, the court noted that it was required to determine the more reasoned approach based on the facts and circumstances of the case. The trial court also found wife to be a credible witness. However, the court had concerns with husband's testimony. It stated:
The trial court systematically discussed the amount and division of the community...
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