Marriage of Honer CA1/4
236 Cal. App. 4th 687
Cal. Ct. App.2015Background
- Tom and Penny Honer were married ~27 years; they co-owned grocery businesses (Cypress Holdings) and related real estate held partly by Spring Pond, LLC. They separated in 2009; trial occurred Dec 2011–Jan 2012; judgment entered Dec 24, 2012.
- Major assets: Cypress Holdings (two Harvest Markets), Mendosa’s building, marital ranch, Paddleford House, Art Center land, retirement accounts; combined net worth about $6.67M.
- Trial court awarded Cypress Holdings to Tom, other income-producing real estate and retirement assets split so that after a $1.576M equalizing payment each received roughly $3.33M. Tom ordered to pay permanent spousal support $7,084/month and 20% of any Cypress Holdings distributions above his $260,000 base salary.
- Valuations: Tom’s expert (Berg) valued Cypress at ~$2.98M as of 12/31/2010; Penny’s expert (Morris) $3.46M as of 6/30/2011. The court adopted a midpoint (~$3.18M), crediting Berg’s methods and interviews.
- Penny moved posttrial to reopen to introduce later financials (arguing retained earnings growth should be divided); the court denied the motion and sanctioned Penny; the Court of Appeal affirmed across property division, valuation method, denial to reopen, support, and overall distribution.
Issues
| Issue | Plaintiff's Argument (Penny) | Defendant's Argument (Tom) | Held |
|---|---|---|---|
| Valuation date and amount for Cypress Holdings | Trial court relied on outdated (12/31/2010) appraisal and ignored post-valuation profit growth | Berg’s appraisal was reasonably near trial; court adjusted upward and selected a number between experts; third appraisal unnecessary given Penny’s delay | Court affirmed trial court: valuation as near as practicable to trial; substantial evidence supports $3.18M figure and no abuse of discretion |
| Use of "marital value" vs. "investment value" | Berg used "marital value" (no minority/marketability discounts); plaintiff says investment/third‑party sale value should control | Marital value is appropriate where surviving spouse will operate business; Berg complied with appraisal standards and fair market value effectively matched marital value here | Court upheld use of marital value; method permissible and goes to weight, not admissibility |
| Motion to reopen evidence to capture post-trial retained earnings | Retained earnings grew substantially after appraisal and before judgment and thus are an omitted community asset that must be divided | Post-trial earnings were ordinary course business results; trial evidence already considered retained earnings; Penny and counsel knew or suspected profits would continue; Tom showed need for reinvestment | Abuse of discretion standard: denial affirmed. Trial court properly found new evidence not sufficiently material/diligent to reopen |
| Spousal support amount and Tom's ability to pay (including availability of retained earnings) | Support ($7,084/mo) too low; court ignored Cypress/Spring Pond assets and disparity; retained earnings should be treated as available to pay support | Retained earnings are not freely distributable "savings"—business needs capital; expert testimony supported reinvestment needs; court considered earning capacity and assets | Court affirmed support award and Ostler‑Smith 20% distribution provision; trial court did not abuse discretion in assessing ability to pay or in structuring contingent percentage award |
| Overall equity of property division; request for retrial before different judge | Distribution is not meaningful/equitable; judge committed reversible errors and should be disqualified on remand | Distribution equalized via cash equalizing payment; judge’s credibility findings supported; no evidence of judicial bias | Court found division practical and equitable; each party received ~$3.33M after equalization; no basis to remand or replace judge |
Key Cases Cited
- In re Marriage of Campi, 212 Cal.App.4th 1565 (discussing abuse of discretion standard for valuation and division)
- In re Marriage of Hewitson, 142 Cal.App.3d 874 (limitations on certain valuation comparators for closely held companies)
- In re Marriage of Zaentz, 218 Cal.App.3d 154 (trial court discretion in apportioning proceeds where conflicting expert testimony exists)
- In re Marriage of Olson, 27 Cal.3d 414 (standards for reopening evidence posttrial)
- In re Marriage of Blazer, 176 Cal.App.4th 1438 (business retained earnings/reinvestment may be excluded from available support where reinvestment need shown)
- In re Marriage of Cheriton, 92 Cal.App.4th 269 (financial disparity and balancing hardships considered under §4320)
- In re Marriage of Ostler & Smith, 223 Cal.App.3d 33 (permitting contingent percentage awards of future bonuses/distributions)
- In re Marriage of Winter, 7 Cal.App.4th 1926 (temporary support may preserve spouses’ habit of investing)
- In re Marriage of Drapeau, 93 Cal.App.4th 1086 (treatment of post‑separation earned benefits and support when savings maintained during marriage)