Shifren v. Shifren

1

GARY SHIFREN, Appellant, v. ROBYN SHIFREN, Appellant.

D079966

California Court of Appeals, Fourth District, First Division

January 22, 2024

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of San Diego County No 18FL001905C Sharon L. Kalemkiarian, Judge. Affirmed.

Niddrie Addams Fuller Singh and Rupa G. Singh for Appellant Gary Shifren.

Bickford Blado & Botros and Andrew J. Botros for Appellant Robyn Shifren.

HUFFMAN, ACTING P. J.

This case involves the application of South African matrimonial law to a premarital agreement (called an antenuptial contract (ANC) in South Africa) executed by plaintiff Gary Shifren (Gary) and defendant Robyn Shifren (Robyn) about a week before they married in 2000 in what used to be their home country. The default matrimonial property regime in South Africa is known as "community of property," in which all assets the prospective spouses had before marriage, as well as assets they acquire during marriage, become part of a joint estate that is divided equally when their marriage is dissolved either by divorce or death. (Yarbrough, South Africa's Wedding Jitters: Consolidation, Abolition, or Proliferation? (2006) 18 Yale J. of Law &Feminism 497, 514-515, fns. 103 &104.) Prospective spouses, however, may opt out of community of property and agree in a prenuptial contract to an optional South African matrimonial regime called the "accrual system."

Under the accrual system, prospective spouses retain their own antenuptial and postnuptial assets and liabilities. (See Marumoagae, The Beginning of the End: Dissolution of Marriage Under Accrual System (2015) De Rebus, p. 2 [as of January 22, 2024], archived at (hereafter Marumoagae).) When the marriage is dissolved under the accrual system," 'the spouse whose estate shows no accrual or a smaller accrual than the estate of the other spouse . . . acquires a claim against the other spouse or his [or her] estate for an amount equal to half of the difference.'" (Marumoagae, at p. 4, quoting the South African Matrimonial Property Act No. 88 of 1984 § 3(1) (MPA).) As particularly relevant here, parties may list their separate assets in an antenuptial agreement that will be excluded from accrual. Also excluded are assets acquired "by virtue of" such excluded assets. (Marumoagae, at p. 4, citing MPA, § 4(1)(b)(ii).)

Gary and Robyn opted out of community of property and adopted the accrual system in their validly executed ANC. Gary excluded from accrual his "member's interest and/or loan account[s]" of five companies he owned before his marriage to Robyn. Gary, while residing in California, ended up selling the tangible assets of the companies at auction in South Africa during a "fire sale," after he and his family fled South Africa due to a violent home invasion robbery. Gary eventually used what he describes as "several resourceful strategies" to transfer some of these assets to the United States, where he alleges he used a portion to start Interio, LLC (Interio USA), and later ChemxWorks, Inc. (ChemxWorks). The couple separated in September 2017 and their divorce became final in November 2018.

A dispute arose between the parties over the division of their assets governed by the ANC, and specifically, whether ChemxWorks was excluded from Gary's accrual estate. After a multi-day hearing, the trial court issued a statement of decision (SOD) and judgment, finding under South African law that Robyn's accrual claim against Gary included an equal share of ChemxWorks, based on the court's additional finding that the assets from the fire sale belonged to the South African companies and not Gary; and that he, in any event, was unable to establish the requisite "clear nexus" between the assets from the fire sale and/or loan accounts of his South African businesses and Interio USA/ChemxWorks.

On appeal, Gary seeks reversal of the judgment, arguing the trial court's interpretation of the ANC is flawed, and the assets he used to form Interio USA, the predecessor to ChemxWorks, were traceable to his South African businesses and thus excluded from the accrual regime. He therefore argues the court erred in including ChemxWorks in his accrual estate. He also raises other arguments including the court erred in valuing ChemxWorks as of the date of divorce and in awarding Robyn permanent spousal support.

Robyn, in her (protective) cross-appeal, contends that, if the property division of the judgment and the award of permanent spousal support are reversed, the matter should be remanded for the trial court to reconsider its support award and its decision not to award her attorney fees.

As we explain, we independently conclude that the assets from the fire sale belonged to Gary's companies and not Gary individually as a shareholder, inasmuch as he did not sell his "member's interest" in the fire sale; and that substantial evidence supports the trial court's findings (1) that, even if the fire sale proceeds were excluded, there was not a "clear nexus" between those proceeds and the two businesses he formed while living in California; and (2) that the amount of money Gary received on a "loan account" from one of his South African companies could not be determined with any accuracy as of the date of commencement of the marriage. We therefore conclude the court did not err in awarding Robyn half of ChemxWorks' valuation in determining the accrual of each party's estates.

Moreover, we conclude the court properly exercised its discretion when it relied on a court-appointed neutral expert in valuing ChemxWorks and that its valuation is supported by substantial evidence; and when it awarded Robyn permanent spousal support. We thus affirm the judgment. In light of our affirmance, we deem Robyn's (protective) cross-appeal moot.

FACTUAL AND PROCEDURAL BACKGROUND

Gary and Robyn met in 1997 and married on December 31, 2000. They had a son together, R., born in 2001. Robyn also had two children from a previous marriage. Their divorce became final on November 17, 2018.

A. Antenuptial Assets

Before they married, both Gary and Robyn had established businesses. Between about 1990 and 1999, Gary founded five companies in South Africa involved in the design, manufacture, and sale of furniture and related products. Gary initially was the sole "shareholder" or "member" of the five companies identified as: 1) Placebo Designs CC^[1] (Placebo Designs), which owned an 80,000 square foot factory containing equipment and machines used to make furniture; 2) Kido Designs, which owned a residence Gary remodeled to use as a showroom for his furniture; 3) Interio CC, a furniture retail location; 4) Interio Springfield, another furniture retail location; and 5) Interio Pretoria, also a retail location (these five companies are sometimes collectively referred to as the South African Companies and the three Interio companies as Interio SA). At some point Gary's father invested money in Placebo Designs and became a 10 percent owner.

Gary estimated in 1999 he had about 60 employees working for him across all companies; and collectively his businesses were worth about $1.2 million (U.S.)^[2] dollars. Gary also had obtained two patents, one owned by Placebo Designs and the other by him personally.

After completing school, Robyn became a professional ballerina and performed in South Africa, London, and around the world until July 1989, when she suffered major injuries in a car accident. While touring, Robyn met her first husband. They married in 1988, had two sons, separated in about 1996, and subsequently divorced. After the divorce, Robyn worked full-time in her father's store, where they developed a cosmetic business called Ascot Agencies Limited (Ascot). Robyn was busy running Ascot when she met Gary in December 1997, and the couple moved in together about a year later.

B. The Family Is Forced to Leave South Africa

About 10 days before their wedding, Gary and Robyn, along with Robyn's two sons, were victims of a home invasion and armed robbery by a South African gang. Robyn at the time was about four months pregnant with the couple's son R. The family escaped unharmed but Gary ended up killing the gang leader in self-defense, which led to threats on his life from the remaining gang members. The family promptly moved to a house owned by Robyn's father, which the couple had been remodeling and had intended to occupy. After other concerning incidents including a break-in at Gary's factory and the killing of a police officer outside of Gary's offices, the couple decided to leave South Africa, ultimately choosing to relocate in Southern California, where they had family.

Gary initially traveled by himself to Southern California in early October 2001, with the intention of returning to South Africa. However, once in California he decided it was unsafe to return. Because Gary left South Africa "in a real hurry," he did not have an opportunity to gather certain items including bank records and other documents.

C. Gary Sells the Assets of the South African Companies but Not His Member's Interests

Once in California, Gary attempted to sell his South African Companies "as a going concern" but could not find a buyer. Instead, he sold the businesses' "hard assets" "piecemeal" at an auction in mid-November 2001. This included machinery, fixtures furniture, and inventory. With his father's assistance, Gary was able to transport some smaller pieces of equipment to the United States at the end of 2022. Gary testified that none of the "intellectual property" of the South African Companies was sold, such as "drawings and spreadsheets" that he had created over the years to design and manufacture furniture. Nor did he sell his "membership interest" in any of the five...