Patrick v. Alacer Corp.
201 Cal. App. 4th 1326
| Cal. Ct. App. | 2011Background
- Alacer Corp. stock was held in Jay Patrick's revocable trust; after Jay's 2003 death, plaintiff Ymelda Patrick sought a declaration of her community property interest in Alacer.
- Trial court determined Alacer stock was Jay's separate property, but that a community interest arose in the growth during the marriage, awarding about $3.2 million to plaintiff and prejudgment interest.
- Court later granted judgment on the pleadings for defendants on remaining claims, holding they were based on plaintiff’s claimed stock ownership, which she did not have.
- Appellate proceedings addressed whether plaintiff’s declaratory relief claim was timely, and whether the community had an interest in Alacer’s increased value and how to apportion it.
- Court conducted bifurcated proceedings, applying Pereira to apportion growth between Jay’s separate property and the community, and rejected allocation of Alacer stock to plaintiff.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of declaratory relief claim | Patrick argues claim timely under §1101(b). | Defendants contend claim time-barred by limitations statutes. | Declaratory relief timely; no limitations bar except laches not shown. |
| Existence of community interest in Alacer’s growth | Growth attributed to community efforts should be shared. | Alacer’s growth largely due to separate property and intrinsic value; limited community interest. | There is a community interest in growth; apportioned using Pereira. |
| Valuation and apportionment method | Court should value at trial and use capitalized cash flow method. | Court properly used Pereira with capitalization of excess earnings; no abuse. | Pereira method applied; capitalization of excess earnings adopted; substantial evidence supported apportionment. |
| entitlement to Alacer stock to satisfy community interest | Stock transfer should satisfy community interest. | No community stock ownership; trust ownership prevents stock transfer. | Plaintiff not entitled to Alacer stock; transfer to satisfy interest not required. |
| Prejudgment interest | Court should award prejudgment interest for loss of use. | Discretionary; argue against excessive interest. | Prejudgment interest properly awarded; within court’s discretion. |
Key Cases Cited
- Dekker v. Dekker, 17 Cal.App.4th 842 (Cal. Ct. App. 199-) (apportionment framework for community contributions to separate-property business)
- Pereira v. Pereira, 156 Cal. 1 (Cal. 1909) (formal rule for allocating business profits between separate and community property)
- Van Camp v. Van Camp, 53 Cal.App. 17 (Cal. Ct. App. 1921) (alternative to Pereira when community effort is involved)
- In re Marriage of Dekker, 17 Cal.App.4th 842 (Cal. Ct. App. 1993) (emphasizes substantial justice in apportionment between community and separate property)
- Berry v. Berry, 216 Cal.App.3d 1155 (Cal. Ct. App. 1989) (tenants in common concept post-marriage dissolution relief resembles community partition)
- Sangiolo v. Sangiolo, 87 Cal.App.3d 511 (Cal. Ct. App. 1978) (supporting no limitations period to partition community interest)
- Bullis v. Security Pac. Nat. Bank, 21 Cal.3d 801 (Cal. 1978) (prejudgment interest as compensation for loss of use of property)
- Kenworthy v. Hadden, 87 Cal.App.3d 696 (Cal. Ct. App. 1978) (present existing community property interests not mere money claims)