SCHULMAN VS. SCHULMAN (DIVORCE PROPERTY & ALIMONY)

Statutes cited

Key holdings

Practitioner summary

This appeal concerned apportionment of the increased value of separate-property business between the separate and community estates, and an alimony award. Under NRCP 53(e)(2), a court must accept a master's factual findings unless clearly erroneous, and upon finding a portion clearly erroneous it has broad discretion to adopt, modify, reject in whole or part, receive further evidence, or recommit. The district judge did not err in rejecting valuations premised on an American Meat Institute report that excluded small plants like Schulman Meats. Both the Pereira (fair return on separate capital allocated as separate, remainder to community) and Van Camp (reasonable value of the owner-spouse's community services allocated to community, balance to separate) approaches remain viable, and the court may select whichever achieves substantial justice. Johnson v. Johnson, 89 Nev. 244, 510 P.2d 625 (1973). Applying Van Camp was not an abuse of discretion where the separate-property capital investment, and the SBA loan secured by the business assets, were essential to the enterprise; the court need not identify the specific economic factors producing the return on capital. Whether an alleged oral promise of stock, or the creditor's reliance in requiring the wife's guaranty, transmuted the separate property into community property were questions of fact resolved against Mary Ann and supported by the record; a spouse's signature on a guaranty for a loan made on the credit of separate property does not transmute the property. Hogevoll v. Hogevoll, 138 P.2d 693 (Cal. App. 1943). The alimony award rested in the district court's broad discretion. Buchanan v. Buchanan, 90 Nev. 209, 523 P.2d 1 (1974).

In plain language

Mary Ann Schulman sued Albert Schulman for divorce. Albert had owned a Las Vegas meat business (Schulman Meats) for about 40 years before the 1968 marriage, so the business itself was his separate property. During the marriage the business grew substantially and was incorporated, and it was expanded using a large Small Business Administration (SBA) loan that Mary Ann had to sign a guaranty for. The main dispute was how much of the increase in the business's value belonged to the community (and thus to Mary Ann). The parties agreed to a special master (an accountant) who used one accepted method (the Pereira approach) and calculated a large community share. The district judge rejected parts of the master's report as clearly wrong, in particular the industry data the master relied on, and instead used a different accepted method (the Van Camp approach), which credits the community with the reasonable value of the owner-spouse's services, minus what the family already spent from the business. Under that method, the remaining community interest in the business was $55,770, of which Mary Ann's share was $27,885. The judge also ordered the family home sold and the proceeds split, and awarded Mary Ann alimony of $1,000 per month for six months. Mary Ann appealed. The Nevada Supreme Court affirmed. It held the district judge acted within his broad power under the court rules to reject a master's clearly erroneous findings; that both the Pereira and Van Camp methods are valid and a court may pick whichever achieves substantial justice; and that using Van Camp was fair here because the business could not have operated without the separate-property capital and the SBA loan secured by it. The court also upheld rejection of Mary Ann's claims that the business had been converted into community property (an alleged oral promise of stock, and her guaranty of the SBA loan), and upheld the limited alimony award as within the judge's broad discretion given the short marriage.