Marriage Of Czapar

285 Cal. Rptr. 479 (1991)

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Nature of the Case

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Facts

H and W separated in January 1983. H filed a petition for marital dissolution in September 1984 to end his 22-year marriage to W. H, and W started Anaheim Custom Extruders, Inc. (ACE), a plastic extruding company, in 1977. H and W agree the business is community property. Before separation, H managed, and Phyllis had been employed by, ACE. After separation, H continued to manage ACE. W also continued to work for ACE until she was fired by H in December 1984. The trial court ordered ACE sold in June 1987. The court subsequently appointed its own expert to value ACE in April 1988. In July and August 1988, the court held a trial on the value of ACE and other reserved issues. The trial court awarded ACE to H and ruled it had a cash value to the community of $494,058. The actual market value was $644,058, but the court concluded that should H sell ACE he would be required to give a covenant not to compete. This was valued at $150,000 based upon H's prospective loss of earnings and reduced the value of ACE accordingly. The only information supporting the $150,000 figure is an ex parte letter written to the court by a prospective purchaser before the court appointed its own expert to value ACE. The letter outlined a prior offer for ACE of $420,000, plus $50,000 per year to be paid to H for a three-year noncompetition agreement and a new offer of $610,000, less any 'non-compete funds.' However, this letter was not introduced into evidence. There was no evidence that H was contemplating a sale of ACE. W appealed.