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Neu v. Superior Court of Los Angeles County2/22/2002
NOT TO BE PUBLISHED
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.
A husband sued his former employer for breach of contract and tort damages, alleging the company was really a family business in which he had an ownership interest. As part of the settlement of the husband's lawsuit, assets were divided between the husband and his brother and placed in existing trusts. In this subsequent marital dissolution proceeding, the wife claims a community property interest in the trusts' assets, and wants to join the trusts as parties to the dissolution proceeding. The family law court denied the wife's motion, and the wife filed a petition for a writ of mandate. We grant the petition as prayed.
FACTS
Patricia and Richard Neu were married in 1969. At the time of the marriage, Richard was employed by his father's company, Hugo Neu & Sons, Inc. (previously known as Hugo Neu Corporation and therefore referred to by the parties and by us as HNC).
In 1989, Richard sued HNC for breach of contract, interference with contractual relations, fraud, and other torts. According to Richard's complaint, HNC (the largest exporter of scrap metal in the United States) "is a privately-held corporation in which the stock is held as follows: 60% in a trust for the benefit of Hugo Neu's widow, Doris Neu, which will pass on her death equally to trusts for the issue of Richard Neu and John Neu [Hugo Neu's sons]; 15% in trust for the issue of Richard Neu; 15% in trust for the issue of John Neu; 5% in trust for Richard Neu; 5% in trust for John Neu." When Hugo died in 1985, HNC's board of directors appointed John as president and Richard as chairman, with "the express representation and a resolution providing that John and Richard would switch jobs every 5 years and would have equal rights in the management and control of ." Richard's employment was nevertheless terminated in December 1988 (allegedly as the result of his brother's efforts to oust him from the company).
During the course of his lawsuit against HNC, Richard spent more than $4 million on attorney's fees and other costs, including the payment of experts who calculated Richard's damages at more than $42 million. In 1994, Richard settled his dispute with HNC. HNC's assets were divided into two "piles" by John (the "scrap pile" and the "shipping pile"), and Richard was given the right to select either pile (he chose the shipping pile). As a result, a related (and profitable) company owned by Richard and Patricia as a community asset (Pick-Your-Part, Inc.) went into John's pile.
To effectuate the settlement, Neu Holdings Corporation (NHC) was formed to own and control the shipping assets obtained by Richard through the settlement. Richard is the chairman of NHC (and of each of the entities owned by NHC). All of NHC's shares are owned by the Trusts, and Richard and his former lawyer are the trustees of the Trusts.
In 1997, Patricia filed a petition to dissolve the marriage. Richard answered and discovery ensued. Later, Patricia filed a motion for permission to join the Trusts as parties to the marital dissolution proceedings (and a proposed joinder complaint), contending the Trusts had been created solely for tax avoidance purposes -- so that Hugo could "technically divest himself, his wife, and his two sons . . . of all ownership interests" in HNC while at the same time assuring that HNC "would always remain a family business and that bo
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