Marriage Of Finby

222 Cal.App.4th 977 (2013)

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Nature of the Case

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Facts

H and Rhonda (W) were married in 1995 and separated in February 2010. W worked as a financial advisor. Before January 2009, she worked for UBS Financial Services. She developed a list of clients referred to as her “book of business.” As of January 2009, the value of her clients' investments exceeded $192 million. That month W signed a contract with Wells Farge agreeing to work for it as a financial advisor and its managing director of investments. The offer summary contained several compensation bonuses. The first, a transitional bonus exceeding $2.8 million, was “based on 150% of W's pre-hire trailing twelve months production … of $1,868,631.00 … and pre-hire assets of $192,671,911.” Her entitlement to receive the entire amount was conditioned on her remaining employed as a financial advisor by Wells Fargo for 112 months, maintaining a gross production level of over $1.12 million on each anniversary date, and remaining current on any other obligations she owes to the firm. W chose to immediately receive the entire amount of the transitional bonus. Payment was arranged as a loan evidenced by a promissory note whereby Wells Fargo agreed to forgive the sum of $27,687.54 each month over 112 months. Wells Fargo credited wife with an equal amount of income on each monthly pay voucher. If she stopped working for Wells Fargo, the entire unpaid balance of the loan would be due. If she failed to meet production quotas, Wells Fargo would “reduce the amount of the monthly … bonus payment” credited to her. W also could receive a deferred recruitment award bonus of $186,863. But to be eligible for it she must remain employed by Wells Fargo until January 31, 2016. W was eligible for two production bonuses. A first production bonus of $373,726 was due if her “total gross production equaled or exceeded $1,494,905.00 in the best twelve months of the first fourteen-month period beginning February 2009 and ending March 2010 … .” W achieved this goal and received the entire amount of the bonus in April 2010. Wells Fargo arranged the payment as a loan evidenced by a promissory note with the balance to be forgiven in equal monthly installments over a 10-year span, and crediting an equal amount as income on W's monthly pay vouchers. In addition, Wells Fargo's forgiveness of this obligation was also subject to the same employment and production level conditions. A second production bonus was payable if W achieved a higher gross production level between April 2010 and March 2011. W failed to achieve the higher production goal. In mid-2009, Wells Fargo announced a “level 4front” bonus. W qualified for this bonus and was paid $890,000 in mid-2010. The same loan agreement was used as in the other bonuses. W's expert concluded the first production bonus and the level 4front bonus were W's separate property because, being earned over a period of years, they were received after separation. W's second expert described the transitional bonus as a “kind of pay for the book of business … coming over,” calculated as a “multiple of the value of … the [recruitee's] production credits of the trailing 12 months before they were to join your firm.” The level 4front bonus required w to perform extensive analytical work and complete financial plans for her clients. David Altshuler, W's boss, testified the level 4front bonus was a “loyalty award” created “to retain our financial advisors.” H's experts, of course, testified that they were community assets that compensated W for bringing her book of business to Wells Fargo. The bonuses were either based on her book of business (transitional), agreed to before the parties separated, or based on wife's preseparation production (first production and level 4front). On w's book of business, the court ruled it had no value, and husband did not have an interest in it. H's assistance in helping W transfer her clients to Wells Fargo “did not give him an interest in the business. As for the bonuses, the court ruled the portion of transitional bonus earned during the first 11 months of wife's employment with Wells Fargo (slightly over $380,000) was received before separation and thus constituted community property to be divided between the parties. The balance of that bonus and the remaining bonuses were W's separate property because they were not paid or due until after the parties separated. H appealed.