Mamone v. Mamone, 2023

Shane Mamone appealed from a district court order in a  domestic matter. Shane incorporated his own construction company, SCM, in Las Vegas. He put forth significant effort to grow SCM, including making trips to Asia where he was able to obtain project materials at a discount. 

Due to his positive relationship developed in California, Redwood Construction awarded  SCM one of its first projects in 2001. SCM continued to obtain contracts and referrals from  SCM, which became larger and more lucrative. In 2008 or 2009, Shane met Charisse. “In  2010, per the advice of his CPA, Shane incorporated SCM in Wyoming under the corporate  name SCM Enterprises of Nevada.” The couple married in July 2015. Around 2016, the wife began working for SCM. In July 2018, the wife stopped working for SCM. The husband filed  for divorce in August 2018. 

Allen’s Van Camp analysis

Shane engaged Jennifer Allen to value SCM. “Under Van  Camp, if the in-spouse [Shane in this case] working for the claimed separate property  business during marriage receives compensation that is equal to or greater than what is fair  or reasonable for the services provided, then the community may not have an interest in the  business at the date of divorce…. Allen opined that ‘the compensation he was paid for the  services he rendered was at least reasonable.’” Given this conclusion, Allen said the marital  estate would have no community interest under the Van Camp method. 

Allen’s Pereira analysis

Per Allen’s report, “under Pereira the value of the business at the  date of marriage is allowed a reasonable rate of return/appreciation through the date of  divorce. The excess, if any, of the business value at the date of divorce over the separate  property value represents the potential value of the community interest.” 

Allen estimated the value of SCM at the date of marriage at $1,320,000. Under Pereira, the  value at the date of marriage is allowed a reasonable rate of return/appreciation through the date of divorce, May 19, 2020. “After applying [Nevada’s] legal interest rates, Allen estimated  that ‘Shane [had] a $1,790,000 separate property … interest in SCM’ as of May 19, 2020.” 

Using management projections reflecting the impact of COVID-19, Allen determined the  value of SCM at May 19, 2020, at $2,300,000. Thus Allen’s opinion as to the community  property interest value is $510,000 ($2,300,000 minus $1,790,000). 

Charisse’s expert, Diane Tompkins, failed to take into account COVID-19 and did not use management’s projections. 

Bench trial

In the trial, the district court determined the Van Camp method inapplicable  here and used the Pereira apportionment method to determine the parties’ community  interest in SCM upon divorce. The district court also found Allen’s analysis more credible. Shane filed an appeal shortly after the decree. 

The district court’s calculation of the parties’ community interest in SCM

Shane  argued that, contrary to the Nevada Supreme Court opinion in Cord v. Neuhoff, the  apportionment under Pereira was not the preferred method in Nevada and the court can  apply either Van Camp (which would result here in no amount of SCM value being treated as community property) or Pereira to achieve substantial justice between the parties. “Shane  further argues that the parties’ community expenses exceeded the reasonable income of  his position at SCM.” 

Charisse argued that, in Van Camp, the earnings primarily resulted from premarriage capital invested and that the application of Pereira here is correct because the SCM value increase was due to Shane’s efforts during the marriage. 

Application of the apportionment method under Pereira

In case of the use of either  method in Nevada, the court should “determine to what extent such an increase in value  should be apportioned between the asset-owning spouse’s separate estate and the  community property of the spouses.” Where the increase in value was primarily due to the  skill and effort of one or both of the spouses, Pereira should be applied. That method was  appropriate unless the owner of the separate estate can establish that a different method  was more likely to accomplish justice. 

The district court ultimately decided that SCM “would not have succeeded without Shane’s  labor, skill and business relationship.” There was ample evidence in the record that support the district court’s decision to adopt Pereira. The district court did not abuse its discretion. 

The district court’s refusal to deduct community expenses the parties incurred during  their marriage from their community interest in SCM

There was a rebuttable  presumption that all community expenses were paid from community property. Under Cord, if separate property was used to pay community expenses when community assets were  exhausted, a spouse’s separate estate was entitled to reimbursement from the community  estate. Shane’s expert observed that community expenses were paid from both community  assets and separate property. There was no evidence here that at any point all community  assets were exhausted. “Because the record does not demonstrate that the parties’ community assets were exhausted, any community expenses paid with Shane’s separate  property are presumed to be a gift to the community.” (Robinson) The district court acted within its discretion in this matter. 

Conclusion

Other issues were raised on appeal that did not deal with the value of the  business and the apportionment of that value between the community and separate property  amounts. Those issues can be accessed by reading the full opinion.