Court Opinion

ID: 9955673
Source: CourtListenerOpinion
Date Created: 2024-03-28 22:03:01.282713+00
Date Added: 2024-06-11T08:15:14.688649
License: Public Domain

Filed 3/28/24 Vera v. Haddad CA2/1
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

                         SECOND APPELLATE DISTRICT

                                        DIVISION ONE

 PASCALE N. VERA,                                                     B326699

           Appellant,                                                 (Los Angeles County
                                                                      Super. Ct. No. 22PDFL00218)
           v.

 NABIL HADDAD,

           Respondent.

     APPEAL from findings and orders of the Superior Court of
Los Angeles County, Sarah J. Heidel, Judge. Affirmed.
     Salisbury, Lee & Tsuda, Salisbury, Shaw, Lee & Tsuda,
Lee W. Salisbury and Jason Jen-Sen Lee for Appellant.
     Harris Ginsberg, Andrea Fugate Balian; Ribet & Silver and
Claudia Ribet for Respondent.
                  ____________________________
       The purpose of temporary spousal support awarded under
Family Code section 3600 is to maintain the status quo as to the
parties’ living conditions and standards pending trial and
division of their assets. (In re Marriage of Wittgrove (2004)
120 Cal.App.4th 1317, 1327.) Appellant Pascale N. Vera appeals
from the order awarding her temporary spousal support. She
challenges the court’s exclusion from income available for
support: (1) retained earnings respondent Nabil Haddad testified
he needed to fund a plan aimed at modernizing his business,
CompSpec, Inc. (CompSpec or CSI); and (2) interest on those
funds, including interest at a higher rate than the funds were
earning at a bank with which Haddad had a longstanding
financial relationship.
       This appeal turns on whether the family court abused its
discretion in making these rulings. We conclude it did not and
affirm.

                       BACKGROUND
      Our appellate record contains documents regarding
temporary spousal support, specifically Vera’s initial request,
Haddad’s response, and Vera’s reply. The court also admitted the
parties’ declarations but neither party testified. Both parties’
experts testified on direct and cross-examination. We summarize
only those facts pertinent to the issues on appeal.
      According to Vera, she married Haddad in 2000 and they
separated in 2022. Vera and Haddad have two children,
currently adults. Child support, however, was not at issue. The
parties agree that Haddad “owns and operates” CompSpec, which

                                  2
provides computer systems to assist healthcare providers.1
Haddad started the business prior to marrying Vera. Because
CompSpec is an S Corporation,2 its income is taxable as personal
income. The parties own 10 residential properties, eight of which
are rental properties. The parties also have income from other
investments.

1.    Vera’s request for spousal support
       On April 18, 2022, Vera filed a request for spousal
support.3 Attached to her request for spousal support is an
income and expense declaration, indicating that her monthly
expenses were $75,901.
       Vera acknowledged this income and expense declaration
was a “guesstimate.” In her declaration, Vera explained that
during their marriage, Haddad alone managed assets, accounts,
and expenses. According to Vera, “Although we have lived a high
[end] luxury lifestyle for a number of years, it is very difficult for
me to accurately and precisely estimate what the cost of our
lifestyle has been because [Haddad] has excluded me from most
of the information that would be necessary to accurately estimate

      1  Whether CompSpec is separate or community property
is not before us.
      2  Vera’s expert testified that because CompSpec is an
S corporation “whatever income the corporation makes is taxed
on a personal level” and reported on the parties’ personal tax
returns.
      3  Vera also requested attorney fees and costs. She
subsequently withdrew her request for attorney fees when the
parties reached an agreement on using community property to
fund hiring attorneys and accountants.

                                     3
the cost of our lifestyle. My Income and Expense Declaration is
therefore merely a guesstimate of what is necessary to maintain
the kind of lifestyle we have enjoyed and may be subject to major
adjustments once my attorney and forensic accountant have been
able to obtain more accurate information and documentation.”
      Certified public accountant Jack Zuckerman submitted a
declaration on Vera’s behalf. Zuckerman concluded that in 2020,
Haddad’s income available for support was $4,981,150, including
Haddad’s wages and salary and $4.4 million in additional income
attributed to CompSpec’s retained earnings.

2.    Haddad’s response
       Haddad filed a responsive declaration. His expert,
Jason Wegis, a certified public accountant, filed a declaration in
support of Haddad’s declaration.
       Haddad stated in his declaration that CompSpec was the
family’s main source of income. Haddad founded the company in
1989 and was the sole owner since 2002. According to Haddad,
“CompSpec is contracted on a contingency basis with hospitals to
assist their indigent and uninsured patients in obtaining
Medi-Cal and other government supported programs.”
       Haddad also stated, “In 2016, I came to the conclusion that
CSI was in serious jeopardy of going out of business in the next
few years due to the new government regulations, expected fee
change[s] and [a] tougher competitive environment.” In 2016,
Haddad hired an expert to develop a business plan for CompSpec
“to survive and grow.” The business plan called for CompSpec to
retain $12 million in reserves. The $12 million would fund
(1) purchase of another company ($6 to $7 million);
(2) integration of the new company’s systems with CSI’s systems
($100,00 to $200,000); (3) integration of MDX, a billing company

                                   4
CompSpec had already purchased ($500,000 to $700,000);
(4) growth including increasing labor costs ($1 million to
$2 million); and (5) acquisition of an out-of-state company
regarding Medi-Cal eligibility ($2 to $3 million). Haddad
represented, “[T]he ability of CSI to continue to retain enough
earnings to implement the business plan is of paramount
importance to the sustainability of the company.”
       Haddad claimed that to implement the business plan,
CompSpec signed an agreement to purchase MDX, a billing
company, for $1. In 2018, CompSpec started discussions with an
“early out company” and in 2022, CompSpec signed a
nondisclosure agreement with the same company. (According to
Wegis, “early-out” services result in fewer accounts moving to
collections.) The projected cost of this acquisition was between
$6 and $7 million with an additional $200,000 to $300,000 needed
to integrate the new company with CompSpec. CompSpec also
needed funds to “complete the acquisitions of auxiliary product
lines, acquisition of smaller competitors that are based in other
states, and the integration of the new companies. . . .” Haddad
did not want to deplete the parties’ personal savings to fund
CompSpec’s growth.
       To build CompSpec’s reserves, Haddad reduced
distributions from CompSpec to himself. From 2018 through
2021, he averaged $425,000 annually “in distributions.” Haddad
also stated, “[Vera’s] request for the Court to order spousal
support based upon the income of CSI, instead of the
distribution . . . which I actually receive would eliminate the
ability of CSI to continue to implement the business plan which
began in 2017. . . . [I]f CSI cannot retain earnings and
implement the business plan, then the company will not be able

                                  5
to continue.” Haddad also attached to his response a summary of
CompSpec’s November 30, 2016 strategic plan. Haddad offered
to pay temporary spousal support of $21,589 monthly when Vera
moved out of the family residence.
      In his declaration, Wegis explained that since the end of
2017, CompSpec distributed to Haddad “funds . . . needed to pay
personal income taxes, as well as an additional $425,000
annually on average.” Wegis represented that CompSpec’s
income decreased by 31 percent from 2015 to 2016. As a result of
this decrease, CompSpec developed a new business plan. In
February 2018, CompSpec negotiated for the acquisition of a
business costing approximately $6 to $7 million but the
discussions “were put on hold” because CompSpec did not have
adequate funds. In April 2022, CompSpec began conducting due
diligence to acquire the business. Additionally, CompSpec
acquired a different business for $1 and anticipated needing to
spend between $500,000 and $700,000 to update that business’s
software.
      Wegis disagreed with Zukerman’s inclusion of retained
earnings and interest as Haddad’s income available for support.
Wegis explained: “Mr. Zuckerman took a different approach,
calculating Nabil’s income based on a methodology that requires
CompSpec to distribute 100 percent of its income and alter the
business plan it has been implementing since 2017.” Wegis
opined distributing those reserves “could put CompSpec in
financial danger and jeopardize the primary source of income for
the parties . . . .” Wegis calculated spousal support at $21,589

                                  6
using the DissoMaster4 based on the assumption that CompSpec
could continue to distribute $425,000 annually to Haddad. Wegis
reported that as of July 2022, CompSpec transferred funds into
an account bearing interest at a .01 percent rate.
      Wegis analyzed Haddad and Vera’s monthly expenses from
March 1, 2021 through February 28, 2022. He concluded that
Vera’s total monthly expenses were $25,138. There is no
evidence in our record that Vera contested this opinion.
      In his memorandum of points and authorities, Haddad
argued, among other contentions, that CompSpec’s undistributed
earnings should not be considered in determining monthly
spousal support.

3.    Vera’s reply
       Vera asserted in her reply declaration that during the
marriage, she had “unrestricted access to charge expenses on
[her] American Express card.” Vera represented because Haddad
“has chosen not to share information with me throughout our
marriage regarding our income, assets, and his business, I am
not able to comment on his description of the current status of his
business and his plans for its future.”
       Zuckerman also submitted a reply declaration, in which he
opined Haddad’s income available for support was $228,012 per
month, of which $211,500 would be from CompSpec. Zuckerman
imputed additional available income based on adding interest on
CompSpec’s reserves. Zuckerman opined that $17,250 monthly
in interest could accrue if the reserves were moved from a then

      4 The DissoMaster is a computer program family courts
and practitioners use to calculate support. (See In re Marriage of
Schulze (1997) 60 Cal.App.4th 519, 523, fn. 2.)

                                    7
noninterest-bearing Bank of the West account to a Charles
Schwab Value Advantage Money Fund earning 2.36 percent
interest. Zuckerman further opined, “[R]etaining current income
in CompSpec’s bank account as a reserve is unnecessary” because
“S Corporation income flows through to the taxpayer/shareholder
who pays tax on the S Corporation income . . . .” According to
Zuckerman, Haddad had sufficient savings outside CompSpec to
cover CompSpec’s acquisition expenses.
      In her “reply points and authorities” (capitalization
omitted), Vera reiterated that Haddad’s funds available for
temporary spousal support should not be “radically adjusted
downward to account for [his] alleged strategic plan.” Vera also
asserted that the parties have a history of saving money during
the marriage. She also argued she was entitled to $150,000 for
relocation funds.

4.   Hearing
      At a hearing concerning temporary spousal support, Vera’s
counsel stated, “[T]he large difference between us, is whether or
not the capital reserves that Mr. Haddad has built up are
necessary or not. And that’s our major area of disagreement.”
      Zuckerman testified CompSpec had $8.7 million in reserves
which could “be withdrawn tax-free to a certain degree . . . .”
Zuckerman, however, acknowledged that if Haddad transferred
the entire 8.7 million into a personal account, he might incur
additional tax liability. Zuckerman testified that if CompSpec
needed $12 million to purchase a business in keeping with
Haddad’s business plan, Haddad could use personal savings,
including stocks and bonds, to contribute capital to CompSpec.
Zuckerman, however, conceded the standard restraining order in
divorce proceedings would prevent Haddad from utilizing those

                                   8
funds for his business plan without Vera’s written consent.
Zuckerman acknowledged CompSpec was in negotiations to
purchase a business that Zuckerman believed would cost
CompSpec around $8 million. (Haddad’s counsel stated the
purchase price was in the $6 to $7 million range, not $8 million.)
       At a continued hearing, Zuckerman testified CompSpec
could put its $8.7 million reserve in an account earning
3.85 percent interest. Zuckerman acknowledged he had not
evaluated Vera’s needs based on the marital standard of living.
       Testifying for Haddad at the continued hearing, Wegis
explained CompSpec was then earning 1.25 percent interest in an
account at Bank of the West and that placing the reserves in a
higher interest-bearing account would have no effect on Haddad’s
income because the differential in interest would still be part of
CompSpec’s reserves. Wegis stated CompSpec’s relationship with
Bank of the West was “extremely important to CompSpec” and
that a $6 or $7 million acquisition was currently being negotiated
and may require a line of credit from Bank of the West. Wegis
further testified CompSpec’s “economic picture” was trending
downwards.
       Wegis added that since 2018, CompSpec had distributed on
average $425,000 annually to Haddad after payment of taxes.
Wegis opined Vera would not have to alter her standard of living
if the court calculated support based on CompSpec’s distributions
to Haddad over the preceding four years (2018–2022).
       Vera’s counsel countered, “So I think the appropriate order
to be made, at least on a pendente lite order, would be a spousal
support order, under the DissoMaster, following the DissoMaster
guidelines, that does not give Mr. Haddad credit for these capital
reserves that he’s still trying to build up . . . and should also

                                   9
impute the additional income that’s available of 3.8 percent on
the 9.2 million [in CompSpec’s capital reserves].” Counsel
continued, “So, again, I don’t have a DissoMaster to present to
the court, but I believe those are the principles that the court
should consider in making its orders.”
       The court inquired about Vera’s income and expense
declaration and whether she was seeking $75,901 in monthly
expenses. Counsel responded, “[W]e’ll refine it, but it would be in
the neighborhood of about 35 to $39,000, per month plus their
sharing half of the . . . rental income, one-half of the dividends
and interest, on a pendente lite basis. And I believe that that
amount [rental income, dividends, and interest] roughly—
accountants have agreed the total amount is about $23,000 a
month” with Vera’s share at about $11,500 monthly.
       Haddad’s counsel reminded the court that Vera had offered
no evidence impugning Wegis’s calculation of the marital
standard of living. Counsel also argued Vera did not contradict
anything in Haddad’s declaration about CompSpec’s business
plan. Counsel added, “[T]he only evidence before this court is
that this company [CompSpec] put a business plan in place in
2017, that it has the need for the capital reserves. . . . And there
is a specific list provided to the court of what the expenditures
are anticipated to be in the very near future.” Counsel
summarized that Vera’s monthly income, including the spousal
support, rental income, dividends and interest, exceeded her
monthly consumption.

5.    Family court’s order
        In a nutshell, the family court agreed with Haddad.
Specifically, it found, “[W]hat you’re [Vera’s counsel] suggesting,
is it’s really getting at the heart of how Mr. Haddad runs his

                                    10
business, and you want to get in there and micromanage certain
aspects of it in a way that would be advantageous to your client’s
temporary spousal support calculation.” The court continued,
“[Y]ou’re only looking at these two little aspects of this business,
instead of looking at the whole picture, and you’ve picked two
places where you said, ‘I think you should do it differently.’ And I
don’t know that it makes sense to let somebody else come in and
micromanage little aspects of the decision-making in the
business.”
       The court noted its broad discretion to determine what
income is available for temporary spousal support. In exercising
that discretion, the family court agreed with Haddad in not
including CompSpec’s reserves or interest on those reserves as
available funds for support. It reasoned there was a strategic
plan in place since 2017 that “was executed for a number of
years.” Accordingly, the court stated it was “going to exercise
[its] discretion and find that the money that was in CompSpec
being used to capitalize the business . . . is income that’s not
available for support for purposes of calculating guideline spousal
support.”5
       The family court also exercised its discretion not to impute
interest on those reserves or at the higher Charles Schwab rate
although “reasonable minds could differ.” The court credited the
importance of Haddad’s relationship with Bank of the West.
Additionally, the court ordered that any interest CompSpec made
on its reserves would remain in the company.

      5  The court indicated the parties had reserved for a later
date determining whether Vera has a community property
interest in CompSpec’s capital reserves.

                                   11
      The court also ordered the parties to share equally income
from the rental properties and dividends and interest from
separate and community accounts except for the parties’ personal
checking accounts. The court further ordered Haddad to pay
$150,000 to Vera as a community property distribution, the
amount requested by Vera for relocation expenses. The court
ordered Haddad to pay temporary spousal support of $21,565
after Vera vacated the family residence. The court also found
that the spousal support combined with Vera’s other income
sources would cover her expenses.

                         DISCUSSION
       Vera contends “speculative business expenditures that
have not been incurred are not deductible from cashflow
available for support” and “interest should be imputed to the
capital reserves and included in cashflow available for support.”
(Boldface & capitalization omitted.) Vera also claims prejudice
from these alleged errors because (1) the court’s order is
insufficient to maintain status quo; and (2) insufficient temporary
spousal support orders may affect permanent spousal support.
We conclude the applicable standards of appellate review are
dispositive and under those standards, Vera has failed to
demonstrate error. Finding no error, we do not address Vera’s
claims of prejudice.
       “The trial court has broad discretion to determine the
amount of temporary spousal support, considering both the
supported spouse’s need for support and the supporting spouse’s
ability to pay.” (In re Marriage of Blazer (2009) 176 Cal.App.4th
1438, 1442.) “As a general rule, we review spousal support orders
under the deferential abuse of discretion standard. [Citation.]
We examine the challenged order for legal and factual support.

                                   12
‘As long as the court exercised its discretion along legal lines, its
decision will be affirmed on appeal if there is substantial
evidence to support it.’ [Citations.] ‘To the extent that a trial
court’s exercise of discretion is based on the facts of the case, it
will be upheld “as long as its determination is within the range of
the evidence presented.” ’ [Citation.]”6 (Marriage of Blazer, at
p. 1443.) Under the abuse of discretion standard of review, we
view the evidence in the light most favorable to the trial court’s
order. (In re Marriage of Rosevear (1998) 65 Cal.App.4th 673,
682.)
      The court found, pursuant to Haddad’s 2017 strategic plan,
that CompSpec was using retained earnings “to capitalize the
business.” The court rejected Vera’s argument that the evidence
did not support CompSpec’s need to retain its earnings to fund
the acquisition expenditures Haddad had outlined in his
declaration. The court’s factual findings are supported by
substantial evidence, most significantly, by Haddad’s declaration
in which he outlined CompSpec’s needs for the reserves and
attached a 2017 business plan developed before the parties’
separation.
      Although CompSpec had not yet made the expenditures
outlined in Haddad’s declaration, the evidence, including the
Haddad and Wegis declarations, supports the inference
CompSpec was likely to incur the acquisition expenditures to
effectuate its business plan and the expenditures were not
speculative. Put differently, Vera’s argument that speculative

      6 Vera advocates that we should review the family court’s
order de novo because the facts are undisputed. Because
CompSpec’s need for the reserves was a disputed fact, de novo
review is not appropriate.

                                    13
business expenses cannot be excluded from funds available for
support is based on a view of the facts the court rejected.
       Vera argues the court erred in not imputing a higher
interest rate available at Charles Schwab to CompSpec’s
reserves.7 In so arguing, Vera relies on her expert’s testimony
without taking into account that we view the evidence in the light
most favorable to the court’s order. The court credited Wegis’s
testimony that CompSpec needed a continued business
relationship with Bank of the West to effectuate CompSpec’s
business plan. Further, the court credited CompSpec’s need for
$12 million in reserves to fund the 2017 business plan, which in
turn, supported the conclusion that interest, at either financial
institution’s rate, should remain in the reserves. The “ultimate
determination of whether to include” interest from CompSpec’s
reserves in Haddad’s income was “entrusted to the [family]
court’s discretion” (see In re Marriage of Pletcher (2021)
68 Cal.App.5th 906, 919), and Vera demonstrates no abuse of
that discretion.8

      7  On appeal, Vera states Zuckerman “testified that
[Haddad] could obtain interest of 3.85 percent in a Charles
Schwab money market account” and the failure to obtain that
interest amount indicated that the reserves were “underutilized
and the trial court should have imputed a reasonable rate of
return.”
      8 In her reply brief, Vera argues (1)“[t]he status quo
includes the parties’ history of saving funds in CompSpec”;
(2) “[Haddad]’s ability to pay goes far beyond the actual
distributions he receives”; and (3) [Vera]’s need for spousal
support includes the need to save.” (Boldface omitted.) We
do not consider arguments Vera makes for the first time on

                                   14
      Vera argues In re Marriage of Berger (2009)
170 Cal.App.4th 1070 stands for the principle that Haddad
“should not be able to unilaterally, and voluntarily, arrange his
business affairs to preclude [Vera] from maintaining the status
quo.” Assuming Berger supports this proposition, the court
did not find that Haddad had “arrange[d] his business affairs to
preclude [Vera] from maintaining the status quo,” and
substantial evidence supports the court’s rejection of this
contention.
      We emphasize that our ruling concerns only temporary
spousal support and is not intended to reflect how the issue of
available funds for purposes of permanent spousal support should
be resolved.

appeal in her reply brief. (See Foxen v. Carpenter (2016)
6 Cal.App.5th 284, 295 [failure to raise argument in appellant’s
opening brief forfeits the argument]; Paulus v. Bob Lynch Ford,
Inc. (2006) 139 Cal.App.4th 659, 685 [“Courts will ordinarily treat
the appellant’s failure to raise an issue in his or her opening brief
as a waiver of that challenge.”].)

                                    15
                          DISPOSITION
       The temporary support order is affirmed. Nabil Haddad is
entitled to his costs on appeal.
       NOT TO BE PUBLISHED.

                                        BENDIX, J.

We concur:

             ROTHSCHILD, P. J.

             CHANEY, J.

                                 16