## Facts

- The parties dissolved a 22-year marriage; the principal community asset was Anaheim Custom Extruders, Inc. (ACE), a plastic-extrusion business managed by the husband after separation.
- The parties separated in January 1983; the wife worked at ACE until the husband terminated her employment in December 1984.
- After rejecting the parties’ valuation evidence, the trial court appointed a neutral valuation expert and later entered judgment dividing property and deciding reserved issues.
- The trial court found ACE’s market value to be $644,058 but reduced the “cash value to the community” to $494,058 by subtracting $150,000 for a covenant not to compete the husband might have to sign if he sold ACE.
- No sale of ACE was pending, and no covenant not to compete existed; the deduction was based on a contingent, future transaction.
- During separation, ACE paid the wife $2,000 per month under a stipulation labeling the payments as community distributions but expressly allowing later reclassification at trial in the judge’s discretion.
- The judgment reclassified the $2,000 monthly payments as spousal support.
- The trial court found the husband mismanaged ACE during separation and thereby wasted community assets.
- The trial court awarded the wife attorney’s fees based on the financial circumstances and conduct-related considerations.

## Issues

1. Whether the court could reduce the community value of a community-owned business by the estimated value of a purely future, hypothetical covenant not to compete tied to a possible later sale.
2. Whether reclassifying stipulated monthly payments as spousal support constituted an impermissible retroactive award of pendente lite support.
3. Whether substantial evidence supported the finding that the husband wasted community assets through mismanagement of the community business during separation.
4. Whether the attorney’s fee award to the wife was an abuse of discretion.

## Decision

- The court reversed the $150,000 reduction to ACE’s community value based on a hypothetical future covenant not to compete and remanded for further proceedings on valuation.
- The court affirmed the reclassification of the $2,000 monthly payments as spousal support.
- The court affirmed the finding that the husband wasted community assets through mismanagement of ACE during separation.
- The court affirmed the attorney’s fee award to the wife.
- The judgment was otherwise affirmed, with remand limited to the valuation adjustment based on the prospective noncompete.

## Legal Principles

- A community asset must be valued for division without discounts based on speculative, contingent future obligations or hypothetical agreements that do not exist and may never occur.
- A trial court acts within its discretion in reclassifying separation-period payments as spousal support when the parties stipulated the payments were subject to later reclassification by the court.
- A managing spouse with post-separation control over a community business may be charged with waste of community assets for mismanagement, and such findings are reviewed for substantial evidence.
- Attorney’s fee awards in dissolution proceedings are reviewed for abuse of discretion and may be based on the parties’ relative financial circumstances and litigation conduct.

## Conclusion

The court held that the trial court improperly discounted the community value of a business for a non-existent, contingent covenant not to compete, but otherwise upheld the dissolution judgment, including retroactive reclassification of stipulated payments as spousal support, the waste finding against the managing spouse, and the attorney’s fee award.


In re Marriage of Czapar, 232 Cal. App. 3d 1308, 285 Cal. Rptr. 479 (Ct. App. 1991)