In this dissolution action, appellant Violet Brooks (Wife) appeals from an order entered after trial on the bifurcated property issue of how to apportion certain stock appreciation. Respondent Evan Brooks (Husband) owned stock in a business he started prior to marriage; the trial court applied the Van Camp formula to apportion the appreciation of the stock during the marriage. Utilizing this approach, the court characterized the increased value of the stock after marriage as return on Husband’s separate property, finding that Husband did not contribute to the growth of the business after the date of marriage. Wife contends that the trial court erred in rendering that ruling. The California Court of Appeal disagreed and affirm the trial court’s order.
In brief, under the Pereira approach, the court calculates a fair return on the spouse’s separate property investment in the business, with the remainder belonging to the community. Under the Van Camp method, the court values the spouse’s community property efforts devoted to the business, with the remainder constituting separate property income. See Pereira v. Pereira (1909) 156 Cal. 1, 7-8 (Pereira); Van Camp v. Van Camp (1921) 53 Cal.App. 17, 27-28 (Van Camp).
“When a spouse’s personal efforts increase the value of his or her separate property business, ‘it becomes necessary to quantify the contributions of the separate capital and community effort to the increase,’ because the ‘community is entitled to the increase in profits attributable to the community endeavor.’ [Citations.]” ( (In re Marriage of Brandes (2015) 239 Cal.App.4th 1461, 1472.)
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* Disclaimer – Robert Rodriguez is licensed to practice only in the State of California & this analysis is applied only under State of California law. Robert D. Rodriguez is also admitted to practice in the U.S. District Courts, Central, Northern & Eastern Districts of California. Robert Rodriguez has practiced in the State of California Court of Appeal.