Court Opinion

ID: 6339263
Source: CourtListenerOpinion
Date Created: 2022-05-10 21:01:50.988441+00
Date Added: 2024-06-11T15:49:08.599533
License: Public Domain

Filed 5/10/22 Marriage of Donohoe & Zaorski CA6
                         NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.

                 IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                           SIXTH APPELLATE DISTRICT

 In re the Marriage of MARTHA J.                                             H046846
 DONOHOE and JAMES M. ZAORSKI.                                               H047286
                                                                            (Santa Clara County
                                                                             Super. Ct. No. 2008-6-FL000003)

 MARTHA J. DONOHOE,

            Appellant,

            v.

 JAMES M. ZAORSKI,

            Respondent.

          Appellant Martha Donohoe and respondent James Zaorski divorced in 2009. In
connection with their divorce, they entered into a marital settlement agreement (MSA),
which provided that Zaorski would pay Donohoe an equalizing payment under certain
circumstances. In 2016, Zaorski sold his interest in a company he founded. It is
undisputed that Zaorski owes Donohoe an equalizing payment based on his “proceeds”—
as that term is used in the MSA—from the sale. However, the parties dispute the amount
of the payment and whether Zaorski owes postjudgment interest on the equalizing
payment.
          In orders issued on February 22, 2019 and July 19, 2019, the trial court resolved
the parties’ disputes. On appeal from those orders, Donohoe argues that the trial court
erred by (1) concluding that a special cash dividend Zaorski received in connection with
the sale does not constitute “proceeds” for purposes of calculating the equalizing
payment; (2) ordering postjudgment interest only from the date she filed her motion to
enforce the MSA; and (3) permitting Zaorski to satisfy what Donohoe characterizes as a
personal debt out of the proceeds, thereby improperly reducing the equalizing payment.
Donohoe also argues that one of the court’s orders, which purports to resolve a tax-
related dispute, is ambiguous.
       For the reasons set forth below, we affirm the July 19, 2019 order but reverse the
February 22, 2019 order and remand with directions.

I.     BACKGROUND
       A.     The Parties’ Divorce and the MSA
       The parties married in 1987. In 2008, they separated, and Donohoe petitioned for
dissolution of their marriage. At that time, Zaorski was CEO of Sequoia Retail Systems,
Inc. (Sequoia), a company he started in the mid-1980’s. Donohoe worked for the Santa
Clara County District Attorney’s Office.
       The parties entered into an MSA. In November 2009, the superior court entered a
judgment of dissolution incorporating that MSA.
       The MSA awarded Donohoe her CalPERS pension as her sole and separate
property and awarded Zaorski all Sequoia stock and stock options as his sole and separate
property. The MSA also provided that, under certain circumstances, Zaorski would pay
Donohoe an equalizing payment. Specifically, paragraph 13 of the MSA stated, in
relevant part: “To equalize the allocation of community assets and debts, and in
settlement of all claims between them, the Court will reserve jurisdiction over the issue of
an equalizing payment by Respondent to Petitioner in the event of Respondent’s
disposition or exchange of [Sequoia] stock shares and options. If between the date of
Judgment and November 30, 2019, Respondent or his estate enters into an agreement to

                                             2
dispose of the shares and options in Sequoia . . . and the proceeds of this disposition
exceed the actuarial value of Petitioner’s CalPERS pension at the date of disposition,
based upon the total CalPERS service credit years as of June 30, 2008, then Respondent
will pay Petitioner, or her estate, 30% of the proceeds that exceed the value of
Petitioner’s CalPERS pension. That payment shall be made within thirty (30) days of the
valuation of the CalPERS pension. The parties will collaborate and agree on a mutually
acceptable actuary to determine the value of Petitioner’s CalPERS pension. . . . The
parties further agree to collaborate and agree on a mutually acceptable business appraiser
to determine the value of Respondent’s disposition or exchange of Sequoia Retail
Systems stock shares and options. . . .”
       Paragraph 6 of the MSA addressed certain tax implications of the dissolution. It
provided: “Except as provided herein, the division of the property and transfer of all
property between the parties, both real and personal, as set forth in this Stipulated
Judgment is between spouses, is incident to the dissolution of the parties’ marriage, is
occurring within one year of the date on which their marriage ceases, and is related to the
cessation of their marriage. Pursuant to the intentions of the parties and the provisions of
the Internal Revenue Code §1041, no gain or loss shall be recognized by either party as a
result of the transfer of property between them, including cash, and the basis of the
transferee in the property shall be the adjusted basis of the transferor. Notwithstanding
the fact that there is no taxable event created by the division of property and transfers in
this agreement, each party is nevertheless solely responsible for any tax ramifications
upon the disposition of any property awarded to them under this Stipulated Judgment.”
       B.     The Sale of Sequoia to Blackboard
       Blackboard offered to purchase Sequoia for $22 million in early 2016. At that
time, Sequoia had approximately $5 million in cash reserves. Blackboard’s offer letter
included a provision allowing Sequoia to retain and distribute that money to its

                                              3
shareholders as a cash dividend. According to Zaorski, that provision clarified that
Blackboard was not buying Sequoia’s cash reserves. Sequoia accepted the offer and
entered into a formal written merger agreement with Blackboard in May 2016.
       At the special meeting during which Sequoia’s board of directors approved the
merger agreement, the board also declared a special cash dividend. The board minutes
stated: “whereas, in connection with the transactions contemplated by the merger, a
dividend of $2.46 per share is being declared.” Sequoia board member Dean Samos
testified: “We paid a dividend because there was a merger. If there was no merger, there
would be no dividend.” Sequoia had never previously paid a dividend.
       Zaorski received his dividend from Sequoia in the amount of $2,372,815.15 on
May 26, 2016.
       Zaorski promptly informed Donohoe of the transaction and, in June 2016, she
obtained an appraisal of her CalPERS pension. The appraiser valued Donohoe’s pension
at $2,820,985.26. Zaorski accepted the valuation by e-mail on June 16, 2016. In the
same e-mail, Zaorski proposed using the price Blackboard paid per share to value his
Sequoia stock rather than a business appraiser’s valuation.
       On July 19, 2016, Zaorski received an initial distribution of $5,382,757.16 from
Blackboard (the July 2016 distribution), a partial payment for the shares of Sequoia stock
that he owned prior to the merger. Most but not all of the July 2016 distribution—
$4,395,560—was derived from formerly community property and thus is subject to the
equalizing payment provision of the MSA. On September 8, 2016, Zaorski received an
additional distribution of $117,081.31 (the September 2016 distribution). A portion of
that distribution also is subject to the equalizing payment provision of the MSA.
       C.     The Parties Dispute the Amount of the Equalizing Payment
       The parties agreed that an equalizing payment was due under the MSA but
disagreed as to how to calculate it; given the dispute, Zaorski made no payment to

                                            4
Donohoe.1 Accordingly, on April 11, 2017, Donohoe filed a request for order requiring
Zaorski to make the equalizing payment. In a supporting brief, she argued that—for
purposes of calculating the payment—the cash dividend should be considered proceeds
from the sale of Zaorski’s Sequoia stock. She further argued that Zaorski was solely
responsible for paying any tax liability incurred in connection with the sale of his Sequoia
stock. Donohoe requested postjudgment interest accruing from July 16, 2016.
       Zaorski initially responded that the equalizing payment should be calculated based
on after-tax net proceeds and that the cash dividend did not constitute proceeds. He later
changed course slightly on the tax issue, arguing in both his trial brief and in his written
closing argument that the equalizing payment should be calculated based on gross
proceeds but that his tax basis in those proceeds should transfer to Donohoe, such that she
would be liable for the associated taxes. Zaorski further argued that no postjudgment
interest was due because the amount of the equalizing payment remained uncertain.
       D.     The February 2019 Order
       A court trial on Donohoe’s request for order took place over two days in August
and October of 2018. In an order filed on February 22, 2019, the trial court (1) ordered
that the cash dividend was not included in the proceeds for purposes of calculating the
equalizing payment; (2) ordered that Donohoe “receive her equalizing payment after the
taxes have been paid by the party responsible, [Zaorski], . . . but calculated as a
percentage of the gross proceeds”; (3) reserved jurisdiction over the escrow payment2;
and (4) awarded Donohoe interest on the equalizing payment “retroactive to the date of

       1
        Zaorski eventually paid Donohoe $499,856 in December 2018.
       2
        A portion of the funds paid by Blackboard to purchase Sequoia were held in
escrow, including $755,814.38 for Zaorski’s shares. Zaorski was expected to receive one
or more escrow distributions. The trial court reserved jurisdiction over the equalizing
payment associated with those anticipated future distributions.
                                              5
filing of [her] motion on April 11, 2017, acc[ru]ing at the rate of 10%.” Donohoe timely
appealed that order, giving rise to case No. H046846.
       E.     The Escrow Distribution and the July 2019 Order
       In April 2018, Blackboard notified Zaorski that it intended to deduct nearly
$94,000 from his escrow distribution to reimburse the company for attorney fees and
costs it incurred in responding to discovery propounded on it by Donohoe in connection
with this matter. In June 2018, Zaorski filed a request for order. Among other things, he
requested that any reduction in his escrow payment from Blackboard for such fees and
costs “be allocated to [Donohoe] and deducted from any recovery the court determines
that she might be due.” He likened the fees and costs to post-separation debt incurred by
Donohoe and argued that the court should exercise its equitable powers to allocate that
debt to Donohoe.
       On December 31, 2018, Zaorski received a distribution of $397,143.05 from the
portion of the sale proceeds that had been held in escrow (the December 2018 distribution
or the escrow distribution). Blackboard deducted $93,852 from Zaorski’s portion of the
escrow distribution to reimburse the company for legal fees it incurred in responding to
Donohoe’s discovery requests.
       In July 2019, following briefing and a hearing, the trial court issued its ruling on
Zaorski’s June 2018 request for order. The court found that “[a]ny reduction in the
escrow payment due to [Zaorski] stemming from any third party legal fees will not be
deemed a separate debt of [Zaorski]. The net proceeds from [the escrow] payment will
be divided between the parties pursuant to the order filed February 22, 2019, without any
offset, reallocation, or assignment of responsibility between the parties.” Donohoe timely
appealed the July 2019 order, giving rise to case No. H047268.
       This court ordered Donohoe’s two appeals considered together for the purposes of
record preparation, briefing, oral argument, and disposition.

                                              6
II.    DISCUSSION

       A.       The Trial Court Did Not Err in Concluding That the Special Dividend
                Does Not Constitute “Proceeds” for Purposes of the MSA
                1.     Legal Principles and Standard of Review
       A marital settlement agreement that has been incorporated into a dissolution
judgment is construed under the statutory rules governing the interpretation of a contract.
(In re Marriage of Thorne & Raccina (2012) 203 Cal.App.4th 492, 501-502.) The
fundamental goal of contract interpretation is “to give effect to the mutual intention of the
parties as it existed at the time of contracting.” (Civ. Code, § 1636.)3 The “words of a
contract are to be understood in their ordinary and popular sense” (id., § 1644), and the
parties’ intent is ascertained from those words alone if it is “clear and explicit, and does
not involve an absurdity.” (Id., § 1638.) Courts routinely consult dictionaries to
determine the usual and ordinary meaning of a word. (Coburn v. Sievert (2005) 133
Cal.App.4th 1483, 1499.)
       A “contract is ambiguous [if its terms are] reasonably susceptible to more than one
interpretation.” (Scheenstra v. California Dairies, Inc. (2013) 213 Cal.App.4th 370, 389
(Scheenstra).) “Extrinsic evidence is admissible to prove a meaning to which the
contract is reasonably susceptible.” (Iqbal v. Ziadeh (2017) 10 Cal.App.5th 1, 8 (Iqbal).)
“The trial court’s determination of whether an ambiguity exists is a question of law,
subject to independent review on appeal.” (Wolf v. Superior Court (2004) 114
Cal.App.4th 1343, 1351 (Wolf).)
       “ ‘It is . . . solely a judicial function to interpret a written instrument unless the
interpretation turns upon the credibility of extrinsic evidence.’ ” (Tin Tin Corp. v. Pacific
Rim Park, LLC (2009) 170 Cal.App.4th 1220, 1225.) Therefore, “ ‘[w]hen no extrinsic

       3
           All statutory references are to the Civil Code unless otherwise indicated.
                                                7
evidence is introduced, or when the competent extrinsic evidence is not in conflict, the
appellate court independently construes the contract. [Citations.]’ ” (Iqbal, supra, 10
Cal.App.5th at p. 8.) When conflicting extrinsic evidence has been introduced, requiring
credibility determinations by the finder of fact, we apply the substantial evidence
standard of review to those determinations. (Hewlett-Packard Co. v. Oracle
Corp. (2021) 65 Cal.App.5th 506, 531-532.) Put differently, the trial court’s resolution
of conflicts in the extrinsic evidence are reviewed for substantial evidence. (Wolf, supra,
114 Cal.App.4th at p. 1351.)
       The standard of review applicable to the trial court’s application of the contract
terms to the facts depends on whether the facts are in dispute. Where the relevant facts
are not in dispute, our review is de novo. (Scheenstra, supra, 213 Cal.App.4th at p. 391.)
But where “the facts to which a contract provision must be applied are disputed or require
the weighing of evidence, the application of that provision presents a question of fact,”
and our review is for substantial evidence. (Id. at p. 391, fn. 15.)
       The parties disagree as to the standard this court should apply in reviewing the
trial court’s determination that the dividend does not constitute “proceeds” within the
meaning of the MSA. Donohoe argues that our review is de novo and asserts that no
extrinsic evidence was presented below as to the meaning of the contract term
“proceeds.” Zaorski maintains the substantial evidence standard of review applies
because extrinsic evidence was presented on the meaning of the MSA’s terms, including
“proceeds.”
       In fact, the parties do not dispute the meaning of the term “proceeds” on appeal,
did not dispute it below, and submitted no extrinsic evidence as to the meaning of that
term in the trial court. Donohoe has consistently argued that the term “proceeds” is not
ambiguous and should be given its plain meaning. Below, she pointed to dictionary
definitions of “proceeds,” including “the total amount brought in”; “that which proceeds,

                                              8
is derived, or results from something”; and “that which is obtained or gained by any
transaction.” In the trial court, Zaorski did not assert that “proceeds” was susceptible to a
different interpretation than the one offered by Donohoe; he instead argued that the
dividend did not meet the definition of proceeds. On appeal, the parties agree that
“proceeds” should be given its ordinary meaning and agree on the dictionary definition
“the total amount brought in.”
       The parties’ dispute centers on the application of that term to the facts. That is,
they disagree as to whether the dividend meets their agreed-upon definition of proceeds.
The evidence submitted at trial—which addressed the nature of the dividend and its
connection, if any, to the sale of Sequoia—was relevant to that dispute. As discussed
below, the relevant facts are not in dispute. Accordingly, our review is de novo.
              2.     Analysis
       Again, the parties agree that “proceeds,” as it is used in the MSA, means “the total
amount brought in.” For that definition, they rely on Merriam-Webster’s Dictionary,
which defines “proceeds” as “ the total amount brought in.” 4 Other dictionary
definitions of “proceeds” include “money that a person or organization makes from
selling . . . something”5, “the money or profit derived from a sale, business venture,
etc.”6, “the amount of money received from a particular event or activity or when

       4
          Merriam-Webster’s Dict. Online  [as of May 9, 2022], archived at: <
https://perma.cc/NUH2-EJBD>.)
        5
          Macmillan Dict. Online
 [as of May 9,
2022], archived at: .)
        6
          Collins Dict. Online
 [as of May 9, 2022],
archived at: .)
                                              9
something is sold”7, and “that which is obtained or gained by any transaction or process;
an outcome; esp. the money obtained from an event, activity, or enterprise.”8 Based on
these sources, we construe the term “proceeds,” as it is used in the MSA, to mean “the
total amount of money brought in by a transaction.”
       Having construed that term, we apply it to the facts. Those facts are not in
dispute. It is undisputed that whether Blackboard was going to purchase Sequoia’s cash
reserves along with its other assets and liabilities was a point of negotiation between
Blackboard and Sequoia. It is undisputed that the companies negotiated an agreement by
which Blackboard did not purchase that cash and explicitly allowed Sequoia to use the
cash to issue a special dividend to shareholders. It is undisputed that the Sequoia board
issued such a dividend because of the impending merger to prevent Blackboard from
obtaining an asset (the cash) it had not purchased.
       What is disputed is whether, under these facts, the dividend constitutes proceeds.
That is, was the dividend Zaorski received an amount brought in by the sale of his
Sequoia stock? It was not. Under the deal as structured, Blackboard did not buy the cash
reserves and those reserves were disbursed to shareholders in the form of the dividend
before the deal closed. Certainly, the dividend was tied to the sale. Certainly, the
transaction could have been structured differently, with Blackboard paying a higher price
to obtain the cash reserves; and under such a deal, the proceeds (and Donohoe’s
equalizing payment) would have been higher. But, given the structure of the deal here,
we cannot say that the dividend was money brought in by the sale. Accordingly, the trial
court did not err in ruling that no equalizing payment is due on the cash dividend.

       7
         Cambridge Dict. Online
 [as of May 9, 2022],
archived at: .)
       8
         Oxford English Dict. Online  [as of
May 9, 2022], archived at: .)
                                             10
       B.     We Construe the Trial Court’s Ambiguous Order as Requiring That the
              Equalizing Payment Be Calculated on Gross (Pre-Tax) Proceeds
       Donohoe argues that the trial court’s order is ambiguous as to whether the
equalizing payment is to be calculated based on gross (pre-tax) proceeds or net (post-tax)
proceeds. She contends that, based on the circumstances surrounding the order’s
preparation, this court should construe the order as requiring that the equalizing payment
be calculated on gross proceeds. Alternatively, Donohoe maintains that, to the extent the
trial court ordered that the equalizing payment be calculated based on net proceeds, it
erred and the order must be reversed. Zaorski responds that the trial court correctly
ordered that the equalizing payment be calculated based on net proceeds and that,
regardless, the issue will be moot.
              1.        Relevant Background
       In the trial court, Donohoe argued that Zaorski was solely responsible for paying
any tax liability incurred in connection with the sale of his Sequoia stock and that she
would have no taxable gain as a result of receiving the equalizing payment. Zaorski
responded that the equalizing payment should be calculated based on gross proceeds but
that his tax basis in the stock would transfer to Donohoe such that she would be liable for
the associated taxes.
       In December 2018, Judge McGowan announced her ruling in open court. With
respect to the tax issue, she stated that while the “parties may not have understood the tax
consequences of their agreement, . . . they did, in fact, agree that each would be
responsible for the tax consequences for their own assets and so for that reason the Court
is not persuaded that the tax basis should be transferred to [Donohoe], but rather
[Donohoe] should receive her equalizing payment after the taxes have been paid by the
party responsible, in this case [Zaorski], for the sale of those proceeds . . . .” Next, the
court reserved jurisdiction on the escrow payment but noted, “it is clear . . . that the
equalizing payment [due on any escrow distribution] should reflect a percentage payment

                                              11
to [Donohoe] from [Zaorski] as anticipated and agreed to in the Marital Settlement
Agreement in an after tax amount.”
       Zaorski’s counsel prepared a proposed order, which tracked Judge McGowan’s
language. Specifically, it provided in relevant part: “The Court finds that Petitioner
should receive her equalizing payment after the taxes have been paid by the party
responsible, in this case Respondent, for the sale of the proceeds. [¶] . . . The equalizing
payment on any subsequent [escrow] payments received by Respondent should reflect a
percentage payment to Petitioner from Respondent as anticipated and agreed to in the
Marital Settlement Agreement in an after tax amount.”
       Donohoe filed objections, noting that she believed the court had ruled that the
equalizing payment should be based on pre-tax proceeds and Zaorski believed the court
had ruled that it should be based on post-tax proceeds. Donohoe also filed her own
proposed order, which included the following language: “all equalizing payments due
[Donohoe] are to be based on [Zaorski’s] gross proceeds . . . .”
       The trial court adopted the order prepared by Zaorski’s counsel, but only after
making handwritten edits. Specifically, Judge McGowan added the phrase “but
calculated as a percentage of the gross proceeds” twice, where the order addresses the
calculation of the equalizing payment. The court’s final order states, in relevant part
(with interlineations italicized): “The Court finds that [Donohoe] should receive her
equalizing payment after the taxes have been paid by the party responsible, in this case
[Zaorski], for his disposition of the formerly community stock and stock options, but
calculated as a percentage of the gross proceeds. [¶] . . . The equalizing payment on any
subsequent escrow payments received by [Zaorski] should reflect a percentage payment
to [Donohoe] from [Zaorski] as anticipated and agreed to in the Marital Settlement
Agreement, in an after tax amount, but calculated as a percentage of the gross proceeds.”

                                             12
              2.     Legal Principles
       “A court order is interpreted under the same rules for interpreting writings in
general. [Citations.] The language of a writing governs if it is clear and explicit. But
when it is susceptible ‘to two interpretations, the court should give the construction that
will make the [writing] lawful, operative, definite, reasonable and capable of being
carried into effect and avoid an interpretation which will make the [writing]
extraordinary, harsh, unjust, inequitable or which would result in absurdity.’ [Citation.]”
(In re Marriage of Falcone & Fyke (2012) 203 Cal.App.4th 964, 989.) “If an order is
ambiguous, the reviewing court may examine the record for its scope and effect and may
look at the circumstances of its making.” (In re Marriage of Samson (2011) 197
Cal.App.4th 23, 27; In re Marriage of Falcone & Fyke, at p. 989 [“Subsequent actions by
the rendering judge may be considered as bearing upon the judgment’s intended meaning
and effect. [Citation.]”.)
              3.     Analysis
       The parties dispute whether the equalizing payment is to be calculated on after-tax
or pre-tax proceeds. The order provides that the equalizing payment is to be made “after
the taxes have been paid . . . but calculated as a percentage of the gross proceeds.” It
further provides that the portion of the equalizing payment paid on future escrow
payments be made “in an after tax amount, but calculated as a percentage of the gross
proceeds.” The portion of the order addressing the future escrow payment is internally
inconsistent. Either the payment must be made based on the gross or pre-tax proceeds, or
it must be made after taxes based on the net proceeds. Because the order requires both
that the payment be made “in an after tax amount” and be “calculated as a percentage of
the gross proceeds,” it is ambiguous.9

       9
        Zaorski asserts without explanation that the order unambiguously calls for the
equalizing payment to be calculated based on after-tax proceeds. We cannot agree.
                                             13
       Given the order is ambiguous, we look to the circumstances of its making. For the
reasons set forth below, those circumstances make clear that the order is properly
construed as requiring the equalizing payment to be calculated based on the gross
proceeds, with Zaorski bearing the full burden of the tax liability.
       First, in announcing her ruling, Judge McGowan squarely rejected Zaorski’s
position on that tax issue. He had argued that his tax basis should transfer to Donohoe,
with her paying the taxes on the gain. Judge McGowan was “not persuaded that the tax
basis should be transferred to [Donohoe].” Judge McGowan also identified Zaorski as
“the party responsible” for paying the taxes, both orally and in the final written order.
       Second, when the parties disagreed as to the language in the written order, Judge
McGowan added—consistent with Donohoe’s request—that the payment be “calculated
as a percentage of the gross proceeds.” The addition of that language would have been
unnecessary (and, indeed, nonsensical) had the court intended that the payment be
calculated based on the net or after-tax proceeds.
       Our construction of the order is consistent with the MSA. Paragraph 6 of that
agreement states: “each party is . . . solely responsible for any tax ramifications upon the
disposition of any property awarded to them under this Stipulated Judgment.” The
Sequoia stock was awarded to Zaorski by the stipulated judgment. Accordingly, he is
“solely responsible for any tax ramifications upon the disposition” of that stock to
Blackboard. Zaorski’s argument that Donohoe is liable for the taxes on her portion of the
proceeds because she “was awarded a portion of the proceeds from the sale of the
Sequoia stock” is not compelling. No proceeds existed at the time the MSA was
executed. Unsurprisingly then, the agreement did not award Donohoe theoretical future
proceeds. Instead, it awarded all of the stock to Zaorski and required him to make a
future cash payment to Donohoe under certain circumstances.

                                             14
       Zaorski also contends that paragraph 13 of the MSA compels a different
conclusion as to the parties’ intent regarding the tax liability associated with the sale of
his Sequoia stock. He notes that paragraph 13 of the MSA used the word “net” in
discussing proceeds.10 He argues “net” means “net of taxes,” such that paragraph 13
requires the equalizing payment to be calculated on after-tax proceeds. While Zaorski
did initially assert this argument below, he later abandoned it to argue that the equalizing
payment should be calculated based on gross proceeds with his tax basis transferring to
Donohoe. Indeed, in his closing argument, he took a position contrary to the one he now
makes, asserting that “the tax liability related to the equalizing payment in the parties’
MSA is not specifically detailed nor addressed in Paragraph 13.”
       “ ‘It is a well-established tenet of appellate jurisprudence that a litigant may not
pursue one line of legal argument in the trial court, and having failed in that approach,
pursue a different, and indeed, contradictory line of argument on appeal.’ [Citation.]
‘ “Bait and switch on appeal not only subjects the parties to avoidable expense, but also
wreaks havoc on a judicial system too burdened to retry cases on theories that could have
been raised earlier.” [Citation.]’ [Citation.]” (Wall v. California Coastal Com. (2021)
72 Cal.App.5th 943, 956.) The argument has been forfeited, and we decline to consider it
for these reasons.

       10
          The MSA provided an example of how the calculation might work, stating:
“For example, if Sequoia Retail Systems is acquired by a third party, [Zaorski] may
receive stock and other cash for his 475,000 shares and 365,430 options that he is
confirmed with under this agreement. At that time, the parties’ business appraiser must
first determine the cumulative value of the stock and cash Respondent receives on the
transaction. For the sake of this example, we assume that the net value of the stock and
cash is $l,600,000.00. If the actuarial value of Petitioner’s CalPERS pension at that time
were $l,500,000.00, then Respondent’s net stock proceeds would exceed that value by
$100,000. Under the foregoing formula, Respondent would then pay Petitioner $30,000
as an equalizing payment.” (Italics added.)
                                              15
       Finally, Zaorski argues that this issue—which party bears the burden of the tax
liability—will be moot by the time our opinion issues because a trial date has been set on
his motion to calculate the equalizing payment. (Although he asserts that the trial will
not proceed as scheduled and will be reset.) We disagree.
       “A case is considered moot when ‘the question addressed was at one time a live
issue in the case,’ but has been deprived of life ‘because of events occurring after the
judicial process was initiated.’ ” (Wilson & Wilson v. City Council of Redwood
City (2011) 191 Cal.App.4th 1559, 1574.) “The pivotal question in determining if a case
is moot is . . . whether the court can grant the plaintiff any effectual relief.” (Ibid.) If
events have made such relief impracticable, rendering the case moot, dismissal is
generally appropriate. (Ibid.)
       Even assuming the trial court has already calculated the equalizing payment, we
nevertheless can grant Donohoe effective relief. To the extent the trial court adopted a
reading of the February 22, 2019 order that differs from our own, Donohoe can seek
relief in the trial court based on our construction.
       In sum, we construe the February 22, 2019 order as requiring that the equalizing
payment be calculated based on the gross or pre-tax value of each distribution Zaorski
receives from Blackboard.
       C.     Postjudgment Interest
       Donohoe maintains that the trial court erred by awarding postjudgment interest
accruing as of the date she filed her request for order, arguing the interest should begin
accruing on July 16, 2016—30 days after Zaorski accepted the valuation of her pension.
For that position, Donohoe relies on the MSA’s requirement that Zaorski make the
equalizing payment within 30 days “of the valuation of the CalPERS pension.” Zaorski
agrees that the trial court erred, but argues that Donohoe suffered no prejudice because, in

                                               16
his view, the amount of the equalizing payment remains uncertain such that he owes no
interest.
              1.     Paragraph 13 of the MSA is a Money Judgment
       The MSA was incorporated into the judgment of dissolution. In In re Marriage of
Pollard (1988) 204 Cal.App.3d 1380, 1382 (Pollard), our colleagues in the Fourth
District held that “part of a judgment of dissolution which awards money in lieu of an in-
kind division of nonmonetary community property is a money judgment on which
interest accrues from the date of its entry, in the absence of an express or implied
agreement by the parties to the contrary.” More recently, the Second District reached a
similar result in In re Marriage of Dalgleish & Selvaggio (2017) 17 Cal.App.5th 1172,
1177-1180 (Dalgleish & Selvaggio), concluding that an equalizing payment in a
dissolution judgment is a money judgment. Based on these authorities, we conclude that
paragraph 13 of the MSA (which was incorporated into the judgment of dissolution) is a
money judgment.
              2.     When Did Postjudgment Interest Begin to Accrue?
       Generally, “interest commences to accrue on a money judgment on the date of
entry of the judgment.” (Code Civ. Proc., § 685.020, subd. (a).) But Donohoe does not
argue that interest began to accrue when the judgment of dissolution was entered in 2009.
Such an argument would be hard to make in this case, given no equalizing payment was
then due. Indeed, it was unknown whether such a payment even would be required at
that time. Instead, she seeks interest on the portion of the equalizing payment based on
the July 2016 distribution from July 16, 2016—30 days after Zaorski accepted the
valuation of her pension. Donohoe proposes treating the September 2016 and December
2018 distributions as installment payments and says statutory interest should accrue
beginning 30 days after Zaorski received each subsequent distribution.

                                             17
       Zaorski makes numerous arguments in response. The thrust of his contentions is
that the amount of the equalizing payment was unknown on July 16, 2016, and remains
uncertain even today, such that interest has not yet begun to accrue.
                     a.     Legal Principles and Standard of Review
       Postjudgment “interest commences to accrue on a money judgment on the date of
entry of the judgment.” (Code Civ. Proc., § 685.020, subd. (a).) If, however, “a money
judgment is payable in installments, interest commences to accrue as to each installment
on the date the installment becomes due,” “[u]nless the judgment otherwise provides.”
(Id., subd. (b).) As a “general equitable principle[,] ‘ “a person who does not know what
sum is owed cannot be in default for failure to pay.” ’ ” (Dalgleish & Selvaggio, supra,
17 Cal.App.5th 1172, 1179, fn. 3.)
       While we are concerned with postjudgment interest here, the law governing
prejudgment interest is useful in analyzing Zaorski’s uncertainty argument. (See
Dalgleish & Selvaggio, supra, 17 Cal.App.5th at p. 1181 [considering “the analogous
area of prejudgment interest” in addressing argument that postjudgment interest could not
accrue until amount of equalization payment was certain].) Section 3287, subdivision (a)
provides for prejudgment interest where damages are “certain, or capable of being made
certain by calculation.” Courts have held that “the certainty required of Civil Code
section 3287, subdivision (a), is absent when the amounts due turn on disputed facts, but
not when the dispute is confined to the rules governing liability.” (Olson v. Cory (1983)
35 Cal.3d 390, 402 (Olson).)
       “[T]he issue of when interest begins to accrue on an amount included in a
monetary judgment is a question of law that we review de novo.” (Dalgleish &
Selvaggio, supra, 17 Cal.App.5th at pp. 1177-1178.)

                                            18
                     b.     Analysis
       The trial court ordered postjudgment interest to begin accruing on April 11, 2017,
the date Donohoe filed her request for order. As the parties agree, that was error. No
legal basis exists for ordering the accrual of postjudgment interest from that date.11
       The key question here is when—if at all—the amount of the equalizing payment
became sufficiently certain to trigger the accrual of postjudgment interest. We begin by
addressing the portion of the equalizing payment based on the July 2016 distribution. We
then address the portion of the equalizing payment based on subsequent distributions.
       Olson is instructive. There, each member of the plaintiff class (all judges and
judicial pensioners) was due one “of two readily calculable amounts: (1) the salary or
pension due under [the applicable statute] as it read before [a] 1976 amendment or (2)
that due under the section as amended.” (Olson, supra, 35 Cal.3d at p. 402.) “The
question whether to pay any judge or pensioner under one version of the statute or the
other did not depend on any factual uncertainty or dispute” but on the resolution of legal
issues. (Ibid.) Our Supreme Court concluded that “[u]ncertainty over those legal issues
did not prevent the amounts due from being ‘certain or capable of being made certain by
calculation’ (Civ. Code, § 3287, subd. (a)).” (Ibid.) As we shall demonstrate, this case is
analogous.
       The parties have two primary disputes—whether the dividend constituted proceeds
and who bore the tax liability. Neither party claimed below that the tax issue impacted
the calculation of the equalizing payment. Instead, they disputed whether Zaorski’s tax
basis transferred to Donohoe such that she would pay a portion of the taxes after

       11
         Where a party is entitled to “receive damages based upon a cause of action in
contract where the claim was unliquidated,” the trial court has the discretion to order
prejudgment interest to accrue “from a date prior to the entry of judgment . . . , but in no
event earlier than the date the action was filed.” (§ 3287, subd. (b).) But this case
involves postjudgment interest.
                                             19
calculation and payment. Accordingly, the only dispute that impacted the calculation of
the equalizing payment was whether the dividend constituted proceeds. And, as
discussed above, that question did not depend on any factual dispute but on the resolution
of legal issues—namely, the application of the MSA to the undisputed facts. Therefore,
once the parties knew the amount of the July 2016 distribution and the value of
Donohoe’s pension, the initial equalizing payment was one of two readily calculable
amounts: (1) 30 percent of the difference between the July 2016 distribution and the
value of Donohoe’s pension (30% x (distribution - pension)) or (2) 30 percent of the
difference between the sum of the July 2016 distribution and the dividend and the value
of Donohoe’s pension (30% x (distribution + dividend - pension)).
        The parties knew the value of Donohoe’s pension on June 16, 2016, when Zaorski
accepted the appraiser’s valuation. The parties knew the amount of the July 2016
distribution no later than July 19, 2016—the day it was paid. The parties knew the
amount of the dividend when it was paid in May 2016. Accordingly, the portion of the
equalizing payment based on the July 2016 distribution was one of two readily calculable
amounts as of July 19, 2016. Postjudgment interest on that portion of the equalizing
payment should run from that date.
        The portion of the equalizing payment based on the September 2016 distribution
was readily calculable on the date that distribution was made—September 8, 2016.
Postjudgment interest on that portion of the equalizing payment should run from that
date.
        The portion of the equalizing payment based on the December 2018 distribution
was readily calculable on the date that distribution was made—December 31, 2018.
Postjudgment interest on that portion of the equalizing payment should run from that
date.

                                           20
       Zaorski attempts to conjure up uncertainty by arguing that because “[n]o business
appraiser was ever retained[,] we still don’t know the ‘cumulative value’ [he] received”
on the sale. This argument is meritless. Paragraph 13 does call for “a mutually
acceptable business appraiser to determine the value of Respondent’s disposition or
exchange of Sequoia Retail Systems stock shares and options. . . .” But, here, Zaorski
received all cash in exchange for his shares. As Zaorski himself asserted in a
June 16, 2016 e-mail to Donohoe, a business appraiser is not needed to determine the
value of cash.
       In sum, the trial court erred in ordering postjudgment interest to begin accruing on
April 11, 2017. We shall direct the trial court on remand to order postjudgment interest
as follows: on the portion of the equalizing payment based on the July 2016 distribution
accruing as of July 19, 2016; on the portion of the equalizing payment based on the
September 2016 distribution accruing as of September 8, 2016; on the portion of the
equalizing payment based on the December 2018 distribution accruing as of
December 31, 2018; and on any portion of the equalizing payment based on any
subsequent distribution accruing as of the date of that subsequent distribution.

       D.        The Impact of Blackboard’s Deduction From Zaorski’s Escrow
                 Distribution on the Equalizing Payment
       Blackboard deducted nearly $94,000 from Zaorski’s December 2018 distribution
to reimburse the company for legal fees it incurred responding to discovery propounded
by Donohoe in connection with this action. Blackboard did so in reliance on
indemnification provisions in the merger agreement. Below, each party argued that, in
calculating the equalizing payment based on the December 2018 distribution, the other
should bear the full burden of that deduction. Zaorski characterized the legal fees as a
post-separation debt incurred by Donohoe (by propounding excessive discovery) and
argued that the family court should exercise its equitable powers to assign the debt solely

                                            21
to her. Donohoe, in turn, characterized the legal fees as Zaorski’s post-separation debt
(incurred under the terms of the merger agreement), for which he was solely liable under
the MSA. The trial court declined to shift the full burden to either party, instead ordering
them to divide the escrow distribution Zaorski did receive pursuant to the MSA.
       On appeal, Donohoe argues this was error. She contends that paragraph 15 of the
MSA governs the issue and makes Zaorski solely liable for his post-separation debts,
including the amount deducted from his escrow distribution to pay Blackboard’s attorney
fees. Zaorski responds that the trial court’s order was not an abuse of discretion.
       We disagree with Donohoe that paragraph 15 of the MSA governs. That provision
states, in relevant part: “Each party will be separately liable for the debts, obligations and
other liabilities incurred by them after the date of separation. Each party will indemnify
and hold the other party harmless for any such separate obligations.” Of course each
party is separately liable for the debts, obligations, and liabilities they incur after the
marriage is dissolved and the community ceases to exist. Accordingly, paragraph 15
addresses such liabilities incurred between the date of separation and the date of
dissolution. Here, we are concerned with events that took place long after the parties’
marriage ended. Paragraph 15 has no application.
       The parties’ dispute relates to the calculation of the equalizing payment due on the
escrow distribution—namely, whether that calculation is made before or after the
deduction for Blackboard’s legal fees. Therefore, it is paragraph 13 that governs. Under
that provision, Donohoe is entitled to 30 percent of Zaorski’s “proceeds” from the sale of
Sequoia that exceed the value of her pension. Thus, whether she is entitled to a portion
of the money Blackboard deducted from Zaorski’s December 2018 escrow distribution
turns on whether that money constitutes “proceeds” within the meaning of the MSA.
       As discussed above, “proceeds,” as it is used in the MSA, means the total amount
of money brought in by a transaction. Zaorski never received the deducted money.

                                               22
Accordingly, it was not money he brought in from the sale of his Sequoia stock and does
not constitute “proceeds.”
       The language in paragraph 13 explaining how the equalizing payment is to be
calculated confirms our conclusion that the deducted amount does not constitute
“proceeds.” That language states: “For example, if Sequoia Retail Systems is acquired
by a third party, [Zaorski] may receive stock and other cash for his 475,000 shares and
365,430 options that he is confirmed with under this agreement. At that time, the parties’
business appraiser must first determine the cumulative value of the stock and cash
Respondent receives on the transaction.” (Italics added.) Because Zaorski did not
receive the money Blackboard deducted from his escrow distribution, it did not constitute
“proceeds” for purposes of calculating the equalizing payment. Therefore, the trial court
did not err in ordering that the equalizing payment be calculated based on the amount
Zaorski actually received.
III.   DISPOSITION
       The February 22, 2019 order appealed from in case No. H046846 is reversed. The
matter is remanded to the superior court with directions to enter a new and different order
that conforms with this opinion. As to the issue of postjudgment interest, the new order
shall award Donohoe postjudgment interest as follows: on the portion of the equalizing
payment based on the July 2016 distribution accruing as of July 19, 2016; on the portion
of the equalizing payment based on the September 2016 distribution accruing as of
September 8, 2016; on the portion of the equalizing payment based on the December
2018 distribution accruing as of December 31, 2018; and on any portion of the equalizing
payment based on any subsequent distribution accruing as of the date of that subsequent
distribution.
       The July 19, 2019 order appealed from in case No. H047268 is affirmed.
       The parties shall bear their own costs on appeal.

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                                _______________________________
                                ELIA, ACTING P.J.

WE CONCUR:

_____________________________
BAMATTRE-MANOUKIAN, J.

_____________________________
WILSON, J.

Donohoe v. Zaorski
H046846
H047286