Marriage of Micalizio, In re

• Decision Date: 14 March 1988
• Docket Number: No. E003891,E003891
• Citation: 245 Cal.Rptr. 673,199 Cal.App.3d 662
• Parties: In re the MARRIAGE OF Robert A. and Gerry A. MICALIZIO. Robert A. MICALIZIO, Appellant, v. Gerry A. MICALIZIO, Respondent.
• Court: California Court of Appeals Court of Appeals

Page 673

245 Cal.Rptr. 673

199 Cal.App.3d 662

In re the MARRIAGE OF Robert A. and Gerry A. MICALIZIO Robert A. MICALIZIO, Appellant, v. Gerry A. MICALIZIO, Respondent.

No. E003891.

Court of Appeal, Fourth District, Division 2, California.

March 14, 1988.

Certified for Partial Publication. ^*

Review Denied May 25, 1988.

Lurvey & Shapiro, Ira H. Lurvey, Judith Salkow Shapiro, Los Angeles, and David M. Agnew, Rancho Mirage, for appellant

Chandler Brown, Indio, for respondent.

OPINION

DABNEY, Associate Justice.

FACTS AND PROCEDURAL HISTORY

Robert Micalizio (Robert) has been employed since 1960 for the J.R. Norton Company (Norton), a closely-held agricultural corporation. In June 1963, Robert purchased stock in Norton for $100,000 and financed the purchase by executing two promissory notes which called for 19 annual principal payments of $2,500 with balloon payments in the 20th year. Each note stated: "This note is secured by a pledge of shares of stock." Robert, however, retained custody of the share certificates, which were issued in his name alone.

Norton pays dividends only on its preferred stock, all of which is owned by J.R. Norton. The remainder, totalling 25 percent of all stock, is owned by Robert (15 percent) and three other vice-presidents (collectively 10 percent). After a corporate merger, the 150,000 Norton shares were reissued to Robert in January 1971. In March 1971, Robert executed a corporate buy-sell agreement which specified that the minority shareholders could not sell or transfer their stock to any third person without first offering to sell it to the corporation for the lower of the book value of the stock adjusted annually on the basis of standard accounting principles, or the amount offered by any third person.

Robert and Gerry Micalizio (Gerry) were married in June 1971. During their marriage, Robert and Gerry separated and maintained separate households at least four times for periods of six months to three years. Gerry wrote checks from a community account to make the principal payments on Robert's promissory notes. In 1974, the buy-sell agreement was modified to change the formula for determining the price of the stock in the event of a sale to the corporation.

Robert filed a petition for dissolution in May 1981. The judgment as to marital status became final in December 1981, and the court reserved jurisdiction on all other issues. A one-day court trial was held on August 16, 1984. The evidence showed that the value of the stock under the buy-sell agreements was approximately $13 per share. The 1971 buy-sell agreement and the 1974 modification were introduced as exhibits. Roger Stevenson, the secretary-treasurer of Norton, testified that if Norton were to liquidate all of its assets, its stock would be worth $25 per share. Stevenson further testified as to the history, activities, and operations of Norton.

On November 30, 1984, the court filed its "Ruling After Court Trial", which stated that the Norton stock had not been transmuted from Robert's separate property to community property. However, the court ruled that the stock should be valued "on the pro-tanto basis, allocating a portion of the value at the date of trial to the community." The court found that there was no evidence of pre-marriage appreciation in the value of the stock and found that nine annual principal installments of $2,500 on Robert's promissory notes to the Nortons had been made by the community, for a total contribution of 22.5 percent of the purchase price of the stock, or the equivalent of 33,750 shares. The court assigned a value of $13.667 per share to the stock, but directed division of the community shares in kind. The Ruling After Court Trial was never entered in the judgment book.

In June 1984, the buy-sell agreement was again amended to provide, among other things, that Norton must consent to all stock transfers, assignments, or conveyances. In addition, the amended agreement provided more favorable terms for payment to the shareholder from the corporation for shares redeemed or purchased. Robert did not advise the court or Gerry of the amendment during the trial. After learning of the amendment when she sought to have Norton issue shares in her name, Gerry filed a motion based on Code of Civil Procedure sections 657 and 473 for new trial or to set aside for fraud. Gerry claimed that the newly-discovered amendment was oppressive to her and made her shares of Norton stock unsalable. She therefore requested the court to order Robert to pay her the value of the shares of stock.

Gerry filed an "amended" motion for new trial or to set aside for fraud on April 12, 1985, in which she requested the court to order Robert to pay her the value of the shares of stock, and to fix the value at the "fair market price" rather than the contractual buy-out price. Robert submitted declarations of Norton officials stating that: (1) Norton would issue shares of stock to Gerry without the restrictions of the June 1984 agreement, and (2) as of September 30, 1984, the book value of the stock had declined to $12.04 per share because of losses incurred in the lettuce crop.

The court heard the amended motion, and on June 13, 1985, filed its ruling. The court noted that because no judgment had been entered on its earlier ruling, it would treat the amended motion as one to reopen, to reconsider, or for further argument. The court stated that the June 1984 amendment made the stock valueless to Gerry, but did not address Robert's contention that the stock would be issued to Gerry without the restrictions of that amendment. The court reconsidered its earlier valuation of the stock at the buy-back price of $13.67 per share, and concluded that its "real value" was $25 per share. The court entered judgment on April 29, 1986, incorporating its June 13, 1985 ruling. The court ordered Robert to execute a promissory note to Gerry in the amount of $421,875, amortized over 10 years, at 10 percent interest to compensate Gerry for her interest in the stock.

On April 30, 1986, notice of entry of judgment was served on Robert. On May 14, 1986, Robert served notice of intention to move for a new trial. In his declaration in support of the motion, Robert stated that he had not initiated the buy-sell agreements, and that as an employee of and minority shareholder in Norton, he had no power to alter or refuse to enter such agreements. On May 16, 1986, the court filed an order fixing time for the hearing on the motion, erroneously noting on the order that the last date to rule on the motion was July 1, 1986. In fact, under Code of Civil Procedure section 660, the last day to rule on the motion was June 30, 1986.

On June 30, 1986, counsel for both parties met with the trial judge in chambers without a reporter. The court indicated that if Norton and its shareholders, who were not parties to the action, would agree to remove all shareholder restrictions, the court would divide the shares in kind. As a result, Gerry's counsel prepared an amended judgment and Robert's counsel signed the draft approved as to form. Gerry's counsel then delivered the retyped document to the court that afternoon. The court signed the amended judgment on July 1, 1986, one day too late to be timely under section 660. The amended judgment provided that Robert had until July 31 to complete transfer to Gerry of 16,875 shares of the Norton stock, free of any shareholder restrictions, except a right of first refusal, or the April judgment requiring Robert to pay Gerry $25 per share would be reinstated.

The parties and Norton could not agree on the language of Norton's right of first refusal. Meanwhile, Gerry's counsel contacted counsel for Norton and threatened to bring a shareholder's derivate action and a suit to compel liquidation once she became a shareholder of record. Norton therefore refused to transfer shares to Gerry. On July 31, 1986, Robert moved for further reconsideration in light of Gerry's alleged deliberate obstruction of his performance of the amended judgment. The court denied the motion without a hearing.

On August 18, 1986, Robert noticed an appeal from the July 1, 1986 judgment. Gerry moved to dismiss the appeal, contending for the first time that the July 1, 1986 judgment was void and nonappealable because the final day for the court to act on Robert's motion for a new trial was June 30, not July 1. This court suggested that Robert petition the trial court for an order entering the judgment nunc pro tunc as of June 30. The trial court denied Robert's petition, explaining in a minute order dated November 21, 1986, that it signed the amended judgment on July 1, 1986, and ordered it filed on that date in reliance on the clerk's calculation that July 1 was the last day to rule. The trial court further ruled that the July 1 judgment was void. This court therefore dismissed the appeal on December 5, 1986. Robert then petitioned the trial court for the filing of any minute order reflecting the events in chambers which both sides acknowledge took place on June 30, 1986. The court denied that petition, stating that it had no independent recollection of those events.

Robert moved in this court for reconsideration and simultaneously filed a petition for hearing in the Supreme Court. The Supreme Court denied the petition for hearing, and we denied the petition for reconsideration. ¹

On January 5, 1987, Robert filed the current appeal from the trial court's orders denying his applications for nunc pro tunc relief and from the judgment entered on April 29, 1986, "impliedly resurrected and made appealable for the first time upon dismissal of appeal from the subsequent amended judgment as void on December 5, 1986." Gerry again moved for dismissal; we denied her motion.

I. The Court Has Jurisdiction to Hear This Appeal

As a threshold question, this court must determine whether it has jurisdiction to hear this appeal. Gerry argues that this court...