Opinion ID: 1467335
Heading Depth: 3
Heading Rank: 3

Heading: Apportionment of Appreciated Value

Text: [¶ 34] Claude argues in the alternative that it was error for the referee to designate the entire appreciation in the value of his stock as marital property. He asserts that part of the increase in value resulted from market forces and should be set aside. [¶ 35] The disposition of appreciated value of nonmarital property is generally not an all-or-nothing proposition. We differentiate between the increase in value attributable to marital effort and that `attributable to the inherent value of the property and the economic factors affecting it,' preserving the latter as separate property. Knowles, 588 A.2d at 317 (quoting Macdonald v. Macdonald, 532 A.2d 1046, 1050 (1987)). Attribution of appreciated value to marital labor or market forces is a factual determination, and a 100% apportionment to either separate or marital property is not precluded where factually warranted. See id. [¶ 36] Claude asserts that the evidence shows that his most important contributions to the company, the design and manufacture of the systems to create a complete rifle, were in place before the marriage. He further contends that the company's increased sales after the marriage were due not to his efforts, but to external political forces such as the proposed assault rifle ban, the anticipated millennium computer bug, and the September 11, 2001, terrorist attacks. [¶ 37] In addition, Claude argues that the appreciation occurring after 1998, when he was stripped of his duties, could not be attributed to his efforts and should be set aside. Alternatively, he argues that any increase in value after 2001, when he was removed from employment with the company, cannot be attributed to his labor. [¶ 38] In Knowles, even though the evidence showed that technological innovations had occurred in the video field and market conditions favored growth of the company, the trial court determined that all of the increase in value was attributable to the husband's efforts. Id. We affirmed, stating that the trial court did not clearly err in finding that such innovations would not have affected the stock value without husband's efforts. Id. [¶ 39] On this issue, Claude had the burden of proof, and the referee was not persuaded that any portion of the increase in value could be attributed to market forces alone. [2] The evidence demonstrates that while Claude put the company's production systems in place prior to the marriage, he was in charge of manufacturing and operations during the marriage. While demand may have risen in response to external political forces, the referee did not clearly err in determining that such forces would not have affected the stock value without Claude's efforts. [¶ 40] Further, it was not clear error for the referee to have included the appreciation up to 2002. The date is not so remote in time from Claude's departure from the company as to deprive that valuation date of probative value, and the conclusion that Claude's marital effort continued to add value to the company after he left is supported in the record by Claude's own testimony.