More On Modifying Spousal Support
An unpublished opinion out of San Diego County gives us more insight into the challenging area of modifying spousal support, and the requirement of proving a change of circumstances.
Jennifer filed her petition for dissolution in February 2009. In early May 2009, the trial court issued temporary child and spousal support orders. Finding that Thomas’s gross monthly income was $21,833 and Jennifer had no income, the court ordered Thomas to pay monthly child support in the amount of $5,078. In lieu of spousal support, the court ordered that Jennifer have temporary exclusive possession and use of the family residence and that Thomas pay all expenses associated with the residence. The court adopted the parties’ family court services agreement, which provided that the children would primarily reside with Jennifer. On August 19, 2010, Thomas and Jennifer entered into a negotiated global settlement of all issues, which was memorialized in a stipulation for the entry of judgment (Stipulation) that Thomas signed on that date. Jennifer signed the Stipulation about three months later on November 29, the day before Thomas filed his first motion to modify his support obligations. The Stipulation provided that Thomas would continue paying monthly child support in the amount of $5,078 and that in lieu of spousal support Jennifer would continue to have exclusive possession and use of the family residence─and Thomas would continue to pay all expenses associated with the residence─until June 1, 2011 (or a later date agreed to by the parties), at which time Jennifer would vacate the residence and Thomas would pay monthly spousal support and child support in specified amounts.
On November 30, 2010 Thomas filed in propria persona his first motion to modify his child support and spousal support obligations. In his supporting declaration, Thomas stated his circumstances had changed in that he had lost his job and his income was $0. He did not mention his recent sale of a piece of software that he had developed, which indirectly led to his closing his business and becoming unemployed.
At the January 24, 2011 hearing the trial court denied Thomas’s motion to modify his support obligations and noted that Thomas was “asking the court to modify previous spousal support and child support based on an inaccurate income and expense declaration.” The court added that this “cause[d] the court to wonder about his declaration, the change of circumstances where he lost his job, particularly if he terminated his own company.” The court found “[t]here [was] no evidence of unemployment benefits,” noting that “[i]f a person gets fired, they can get unemployment benefits,” but “[i]f they fire themselves, they probably can’t, but we don’t have any evidence of that, no documentary evidence.” Noting also that Thomas was claiming he had $12,534 in monthly expenses and this was “a bit high for someone who has no income,” the court stated, “I don’t think he carried his burden of proof in that regard regarding the circumstances which now find him to be without income.”
On May 11, 2011, less than four months after the court denied his first motion to modify support, Thomas filed his second motion for modification of child and spousal support. In his summary, Thomas requested modification of the current order for child support and spousal support based on “the significant change of circumstances regarding [his] income, the insolvency of [his] company, the sale of the software, [his] obligated full-time consulting employment contract with [LBF Travel], [Jennifer's] receipt of one-half of the sales proceeds from the software, [her] Gavron warning, [her] failure to comply with the court order regarding job contacts, and [her] ability to earn.”
In her responsive declaration, Jennifer asserted that Thomas’s new motion to modify support was based on “the same set of ‘changed’ circumstances” that was the basis of his first motion to modify support, which the court denied. Jennifer reminded the court that in his first motion to modify support Thomas claimed he was unemployed and earned zero income. She stated the court had ordered Thomas to pay her monthly child support in the amount of $5,078, but he “has not made a single child support payment to me since October 2010,” and “[h]e owes me $40,624 in child support and $30,027 in property division payments, plus interest, to date,” for a total of $70,651 plus interest. She acknowledged that in March, April and May 2011, Thomas paid her $8,766 each month, and he had not yet paid anything for June 2011. She also acknowledged that Thomas had made “partial payments of the software sale proceeds in November 2010 and since January 2011.”
In March 2012, the court issued its final statement of decision. Explaining that “[a] spousal support modification may be granted only if there has been a material change of circumstances since the most recent order,” the court found Thomas had “[brought] his second motion to modify support four months after his motion to modify was heard and denied based upon the same facts and circumstances.” The court further found Thomas had a monthly “earning capacity of $21,833 per the court[']s findings of May 5, 2009.” Based on these findings, the court determined that “there has been no change of circumstances regarding [Thomas's] income since [his] last motion to modify support,” which the court denied on January 24, 2011, “the date the court use[d] as a benchmark for determining a change of circumstance.” The court found Thomas had “engineered his current earning capacity through decisions he made himself, first with the decision to liquidate the community business, then his decision to sell the software module he created during the marriage and finally his decision to negotiate a non-competition clause with LBF Travel.” The court also found that “[Thomas's] earning capacity continues to be $21,833 per month”, and he “has the ability to pay for the support of [Jennifer] at the current levels.” After making various other findings, the court denied Thomas’s request for modification of “the existing spousal support order.”
The appellate court affirms.
Applicable Legal Principles
“Modification of spousal support . . . requires a material change of circumstances since the last [spousal support] order.” (In re Marriage of McCann (1996) 41 Cal.App.4th 978, 982, italics added; accord, In re Marriage of Dietz (2009) 176 Cal.App.4th 387, 396.) Similarly, modification of child support requires a material change of circumstances since the last child support order. (In re Marriage of Cryer (2011) 198 Cal.App.4th 1039, 1054.)
“Change of circumstances means a reduction or increase in the supporting spouse’s ability to pay and/or an increase or decrease in the supported spouse’s needs. It includes all factors affecting need and the ability to pay.” (In re Marriage of McCann, supra, 41 Cal.App.4th at p. 982, italics added; accord, In re Marriage of Dietz, supra, 176 Cal.App.4th at p. 396.)
Appellate review of orders modifying spousal or child support is governed by an abuse of discretion standard. (In re Marriage of McCann, supra, 41 Cal.App.4th at pp. 982-983; In re Marriage of Cryer, supra, 198 Cal.App.4th at p. 1054.)
Thomas filed his second motion to modify support about four months after the court denied his first motion to modify support. Claiming “there ha[d] been a significant change of circumstances meriting a modification of child and spousal support,” Thomas asked the court “to modify the child and spousal support ordered in the Judgment that was deemed to be entered on January 24, 2011,” by reducing his monthly obligations for both types of support.
However, in support of his second motion to modify support, Thomas did not claim there had been a material change of circumstances affecting his income and ability to pay support since the last child and spousal support orders issued by the court, as he was required to do. (See In re Marriage of McCann, supra, 41 Cal.App.4th at p. 983; In re Marriage of Cryer, supra, 198 Cal.App.4th at p. 1054.) Rather, he asserted “there has been a significant change of circumstances since I entered into the Stipulation for Entry of Judgment on August 19, 2010.” Thomas then improperly detailed “circumstances [that] significantly change[d] between August and November 2010″ and predated not only the January 2011 support orders, but also his first motion to modify child and spousal support, which he filed on November 30, 2010.
Specifically, as his claimed changes of circumstance affecting his income and ability to pay support, Thomas cited (1) his sale of his software module and the APA and CSA into which he entered to effectuate that sale; (2) his working as a consultant pursuant to the terms of the those agreements; (3) his monthly receipt of $20,800 in gross minimum cash consideration installments resulting from the sale of the software module; and (4) the ABC liquidation of ezGDS, with the resulting termination of his position and his $20,833 gross monthly CEO salary.
For purposes of his second motion to modify support, none of these claimed changes of circumstance was a material change in circumstance affecting his income and ability to pay support because they all predated the last support orders issued by the court in January 2011 when it denied Thomas’s first motion to modify support. Thus, we conclude Thomas’s contention that the court abused its discretion when it found there had been “no change of circumstances regarding [his] income since [his] last motion to modify support” is without merit. The court properly found Thomas “[brought] his second motion to modify support four months after his motion to modify was heard and denied based upon the same facts and circumstances.”
. . .
Regarding imputation of income to Thomas, Thomas contends the court abused its discretion (1) in finding his earning capacity continued to be $21,833 and (2) in imputing such income “contrary to the evidence” without making any finding that he had an available opportunity to earn such income. We conclude the court did not abuse its discretion.
Noting that Thomas “effectively terminat[ed] his own job,” the court found that Thomas “engineered his current earning capacity through decisions he made himself” and that his “earning capacity continues to be $21,833 per month.” The appellate record, discussed at length in the factual and procedural background, ante, supports the court’s findings. The court properly relied on In re Marriage of LaBass & Munsee (1997) 56 Cal.App.4th 1331, in which the Court of Appeal explained that “[a] parent does not ‘ ” ‘have the right to divest himself [or herself] of his [or her] earning ability at the expense of . . . minor children.’ ” ‘ [Citation.] When a parent decides not to seek employment to the best of his or her ability, the court must retain discretion to impute income─otherwise ‘one parent by a unilateral decision could eliminate his or her own responsibility to contribute to the support of the child[ren] . . . .’ “ (Id. at p. 1339; accord, In re Marriage of Mosley (2008) 165 Cal.App.4th 1375, 1391.) “‘Each parent should pay for the support of the children according to his or her ability’” (In re Marriage of LaBass & Munsee, at p. 1337, italics omitted) because “both parents are equally responsible for the support of their children.” (Id. at p. 1340; accord, In re Marriage of Mosley, at p. 1391.)
This case demonstrates, yet again, the tricky burden of showing change of circumstances. You cannot change a support obligation just by filing a motion. It also provides clarity regarding when unemployment does constitute a change of circumstances.