Published: Child and spousal support orders reversed, and those issues remanded to
the trial court for further proceedings. Judgment affirmed as to property issues.
California spousal support & imputing income to custodial parent (mother),
child support, spousal support, and
property allocation issues concerning issue of whether Husband was required to produce specific
records/documents tracing funds for mortgage payments on separate property
real estate when Wife failed to establish existence of a commingled account
for which payments were made (i.e. an account containing rents and salary
deposited by both of the spouses).
Parties were married in 1993, and they separated in 2008. Their marriage
lasted about 15 years, and they had two children, ages 17 and 16, at the
time of the judgment in November 2011. Wife worked as a product planning
manager during the marriage (to 1994), and later as a marketing director
from 1994 to 2004). Wife later accepted employment as vice-president of
marketing for a manufacturer of dental implants from 2004 to 2008. Wife
was terminated in 2008. Wife received a severance package of 12 months
base salary ($201,226). Three months after Wife’s layoff she declined
a position in marketing management because the job would require considerable
travel and not allow her to be home on evenings with the two children.
Wife began her own start-up business in pet healthcare membership insurance
membership but the business was not making money in spite of her efforts.
Wife lived off of loans from her mother and past savings. At time of trial,
Wife’s income was $251 month. Husband presented vocational exam
report showing Wife was highly marketable and employable in marketing
and could have found employment in biotech industries earning up to $185,000
per year, on the high-end of the salary range.
Husband was a real estate broker for Cushman & Wakefield. He also successfully
ran for city council in Aliso Viejo. Husband acquired two pieces of real
property before marriage in 1993 and he was receiving income from the
two rental properties. Husband’s total monthly income at time of
trial was $8,088, which included his $483 pay as a city council member,
a monthly net of $3,493 from Cushman & Wakefield, and net rental income
from properties totaling approximately $4,112.
Wife received her 1/2 of community estate mostly in form of monetary assets.
Husband received the family home. While the initial custody agreement
was 50/50, sometime afterwards the children wanted to live with Wife.
The trial court awarded Wife physical custody of the children 95% of the time.
ISSUES AND ANALYSIS:
Child Support and Imputing Income To Custodial Parent:
In spite of the Family Court (“FC”) outlining in its statement
of decision that Wife’s ability to pay spousal support is not easy,
because she is working in a start-up company and her earnings were down
at the time of the court’s decision, the Court imputed $13,333 a
month income to Wife. FC based its figure on the “income she would
have earned had she taken the position that was offered to her.”
When Wife’s counsel challenged the imputation of income in court,
the trial judge appeared “apologetic,” but did not provide
a basis for using “phantom” income to justify imputing income
to the custodial parent (Wife).
FC’s imputation of $13,584 to the custodial parent (Wife) in light
of Husband’s monthly income of $8,088 and a 95% time share factor,
child support was figured at $1,368 a month. FC’s imputation of
“phantom” income to the custodial parent of $13,333, resulted
in FC imposing a spousal support award of $700 per month in favor on noncustodial
parent. The difference meant Husband would owe Wife, net, $668 per month.
The Court of Appeals (“CA”) disagreed with FC. CA found that
in spite of FC going through a number of the Family Code section 4320
factors, FC made no specific finding that imputation of income would be
in the children’s best interest as set forth in Family Code Section
4058, subdivision (b).
Family Code Section 4058, subdivision (b), states as follows:
(b)The courtmay, in its discretion, consider the earning capacity of a
parent in lieu of the parent's income, consistent with the best interests
of the children.
CA stated in its opinion that there was never any finding by FC that Husband
needed a reduction in support so he could increase his own visitation
time. The CA found while FC gave Wife an “incentive” to go
back to work being a corporate marketing director, such as decision would
result in Wife having less time with the children. Therefore, imputing
income to the custodial parent directly impacts the time she would have
to spend with the two teenage children in this particular case, and FC’s
did not prioritize the needs of the children and did not meet the burden
of Family Code Section 4058, subdivision (b). The CA clearly disagreed
with imputing income to the custodial parent based on the facts of this case.
Spousal Support to a Self-Supporting Spouse:
CA provides that the statutory basis for imputing income for child support
is based on the statutory requirements set forth in section 4058, subdivision
(b), and highlights that section 4058, subdivision (b) takes into consideration
what is in the children’s best interest. In contrast, however, imputing
income to the custodial parent for spousal support is different from child
support because it implicates different policies, and is based on the
factors factors or policy considerations outlined in California Family
Code Section 4320.
CA states the basis for imputing income for spousal support is impliedly
supported by use of the term “earning capacity,” which is
made reference to in section 4320, subdivision (a). However, the CA also
outlines that this is but one of the factor to be considered and that
the consideration of “earning capacity” must be weighed in
the context of the other section 4320 factors. In particular, the term
“earning capacity” must be viewed in the context of section
4320, subdivision (a)(2), which provides for “impaired” earning
capacity due to periods of unemployment during the marriage to devote
time to “domestic duties.”
The CA highlights that the child support guidelines were intended to reflect
the Legislature’s priority for the support of children. However,
when it comes to spousal support there is no single legislative purpose
and it clearly varies from case to case. However, the CA does state that
a spousal support award cannot “undercut” the child support
statutes. When examining FC’s statement of decision, the CA found
that Husband who was described to have had – “excellent skills,
political connections, two houses free and clear, no periods of unemployment,
good assets, good health, a great career, and is self-sufficient –
the Court of Appeals found that there was no basis to award spousal support
in favor of Husband and that such a decision expressly “cut against
the grain” of the intended purpose of section 4320, subdivision
(l), which supports the goal that a supported party shall become self-supporting
in a reasonable time, as an examination of section 4320 factors was already
a self-sufficient spouse. Therefore, the CA found the spousal support
award to have no statutory basis.
One of the properties is referred to in the opinion as, “Boardwalk.”
During divorce (commonly known as marital dissolution proceedings in California),
Husband testified that all rents from the properties were:
- Used to pay the mortgage
- Boardwalk rented 95% of the time
- Rent was $1,200 per month; and,
- Rent covered payments on the mortgage and monthly mortgage payments were
about $1,200 per month.
Husband purchased “Boardwalk” in 1991 (before marriage in 1993).
Husband owned another property with no mortgage. The other property was
also a rental. The combined monthly income for both properties was about
$3,600 per month. This amount was rental income deposited into Husband’s
separate bank account and mortgage payments from “Boardwalk”
came directly from that account.
Wife called an expert at trial to calculate the community interest in Husband’s
separate “Boardwalk” property in two ways. The first calculation
was limited to the amount used to pay off the mortgage in 2003. Using
this approach, the expert calculated the community interest to be valued
Using an alternate calculation, Wife’s expert assumed all mortgage
payments were after marriage and were community. Using this particular
approach the community share was valued higher at $379,112.
The trial court valued the community interest in “Boardwalk”
at $231,500. This trial court based its findings on Husband’s assumptions
attributing the community contribution on the 2003 mortgage payoff. The
trial court also held “Boardwalk” was Husband’s Separate Property.
Wife appealed. Wife argued the trial judge should have used the assumption
more favorable to her (i.e., that all mortgage payments after marriage
came from community property and that community’s interest in “Boardwalk”
should be valued at $379,112). Wife argued Husband was required to produce
specific records (i.e., bank statements) showing rents from “Boardwalk”
being used for mortgage payments. Wife’s argument assumes Husband
had a recordkeeping obligation. Obviously, absent documentation, Wife
asserted that the trial court was required to assume mortgage payments
came from the community estate.
The CA disagreed with Wife on marital property division issues. The Court
held that specific record tracing only arises when there is evidence of
a commingled account.
The Court stated in its opinion:
"The need for specific record tracing arises when there is a commingled
account. As this court explained in In re Marriage of Stole (1998) 63
th 837,841, the need for specific records, as it originated in the "grandaddy"
case of See v. See (1966) 64 Cal.2d 778, is the product of two factors:
- the combination of commingling of separate and community funds and
- the general presumption that property acquired during marriage is community.
A burden of recordkeeping logically arises out of the very act of commingling
funds during marriage so the general community property presumption is
The Court further stated:
"The need for specific records and documents to trace funds is thud
predicated on the existence of a commingled account.
It’s interesting to note that although Wife made some assertions
that the community made payments “to the mortgage” dating
back to 1993, the Court specifically referred to the fact that Wife provided
no document to support her assertion of the use of marital property and
that she never identified any commingled account in which separate property
rents were combined with community earnings.
The Court of Appeals concluded:
"The trial judge got it right; this was a case where the record-keeping
requirements found in See, Higinbotham, and Braud simply did not apply"
- Affirmed in Part, Reversed in Part, and Remanded.
- Cite: In Re Marriage of Ficke, 13 DJDAR 7438 6/12/2013
Additional Citesin Court Opinion: See v. See (1966) 64 Cal.2d 778; Marriage of Higinbotham
(1988) 203 Cal.App.3d 322;
In re Marriage of Braud (1996) 45 Cal.App.4
Learn more about
how to calculate spousal support in California, if you have children, then you should read our guide on
how to calculate guideline child support in California.
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