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Recent Posts in Support Modifications Category

September 11, 2011
  DEVIATING From "Guideline" (Presumptively Correct) CHILD SUPPORT in HIGH EARNER Cases
Posted By Thurman Arnold, CFLS

Special Circumstances in Child Support Cases
Involving an Extraordinarily High Earner

Actor Jon Cryer, one of the stars of the series "Two and a Half Men", was recently rebuffed by the Second Appellate District in his attempt to avoid ongoing and relatively meagre child support obligations to his former Wife ("Sarah") after Los Angeles County removed the party's child from her custody and initiated dependency proceedings. He was also ordered to pay significant fees to Sarah's attorneys for her expenses in defending the action. In a tightly reasoned series of rulings, Superior Court Judge Amy Pellman correctly navigated the California Family Code provisions relating to "presumptively correct" child support without the aid of reliable earlier precedent and resisted taking a reactive stance in response to Sarah's difficulties - or favoring Mr. Cryer unduly - by keeping her eye on maintaining financial equilibrium for both parties, and most importantly for the sake of the involved minor child. She was upheld in all respects on appeal and we now have some important new judicial pronouncements to guide us in apply  Family Code section 4053 and  FC section 4057 that relate to "special circumstances" and deviating from "guideline support."

I really think this case is notable as an illustration of how a forward thinking and thorough jurist - Judge Pellman - can see beyond the difficulties that people sometimes encounter in their parenting lives in an effort to maintain equanimity for the family triad.

IRMO Cryer (8/29/11) 198 Cal.App.4th 1039

Jon and Sarah were married, producing a son together, and later divorced. Sarah subsequently had a second child by a different marriage, which also ended. Although Mom had primary physical custody of the child with Jon for which she received "substantial" child support of $10,000 each month and a 65 % "timeshare", she began to suffer some difficulties that first resulted in Jon's ex parte application to modify the prior agreed upon orders to sole custody in his favor in May, 2009. Jon alleged that she had left his child unsupervised. The family law court denied that ex parte request but admonished Sarah not to leave her children unsupervised. Later that same month CPS became involved when her younger child suffered an injury at Sarah's home. A dependency proceeding was filed against her by the Department of Children and Family Services, which resulted in each child being placed with their respective fathers. There is no commentary in the decision about whether the fathers are working together to preserve and protect the sibling bonding.

When a dependency proceeding is filed by child protective services there are strict rules governing procedure that are generally designed to move the proceeding quickly towards determining whether jurisdiction properly exists, in order to ensure that the public policy favoring reunification with the problem parent is honored. However, Sarah's dependency proceeding moved extraordinarily slowly. In the meantime Jon battled her in Judge Pellman's courtroom. In addition, she was also likely defending against the claims of her second husband over custody of the younger child. We don't know what the exact alleged facts are over the circumstances giving rise to the dependency proceeding, but it is obvious that Sarah had her hands full with "two and a half men" - two former husbands and a young child.

Once his son was placed into his custody, Jon filed an application to modify the $10,000 in monthly support to zero since, after all, the child had temporarily been placed with him. Did he hope this might be the killing stroke (coup de grace) that would bring Mom to her knees, forever? There are litigants who feel that if they seize upon the other party's moment of weakness they will remain in power for the remainder of a child's minority, and a lawyer might reasonably advise this tactic under the aegis of "zealous representation". Jon's extreme request was his first mistake. When people want it all they are sometimes sorely disappointed.

Mother argued that $10,000/month was no burden to Jon because that amount was only 3 percent of his income at the time. She urged that the outcome of the dependency proceeding was uncertain, temporary, and subject to change and that without a steady child support order she would have no money to pay her mortgage, car payments, or any other bills. She pointed out that such a result could never serve the child's best interests.

This is where an outstanding trial judge makes all the difference, because superficially Jon's contentions were reasonable.

Prior to the hearing the parties exchanged income and expense declarations. Jon's "stated income" was alleged as $327,000 monthly when averaged over three years, he held $7 million in liquid assets, and monthly expenses of $29,000. By the way, if people want to go public about their affairs, litigation is the right choice. Sarah had "negligible" assets and overhead expenses of $10,000 monthly, not including attorney fees.

A "guideline" child support order using the "Dissomaster" based upon mother's reduced timeshare would have resulted in her favor of a modified amount of $1,141/month. Sarah argued she would lose everything if that was her only income.

The matter was heard on November 2, 2009. Judge Pellman declined to reduce Jon's child support to zero, even though Sarah had little custodial time under the pending dependency court orders, but she did reduce it significantly from $10,000 to $8,000 monthly. The trial court noted that since Sarah's custody arrangement could be modified by the dependency court in short order (which was expected to be the situation) and DCFS could liberalize Mom's visitation schedule at any time, and therefore found that the minor's best interest was best served if the boy could return to the same home that he had shared with his mother prior to the proceedings, and further that it was important for both the mother and child that she have the ability to have regular and consistent contact with him. She ordered the father to pay $20,000 in attorney fees to Sarah's attorneys.

Jon was not satisfied with this ruling. He immediately filed a motion for reconsideration together with a separate Order to Show Cause seeking an accounting of how all child support funds he'd paid had been used, alternatively requesting that these funds be placed into a trust account for the 'direct benefit' of his son. Evidently he believed that paying a mortgage, and having a car, only benefited Sarah and not the boy. Judge Pellman denied his requests (after making some technical corrections to her orders) and awarded that Sarah receive another $5,000 in attorney fees, which was likely only a portion of what she actually incurred.

Three months later Jon filed supplemental authorities prior to a review hearing that had been set, arguing that the dependency proceedings had still not be resolved and that Sarah's visitations had not been "liberalized" as the Court had anticipated. Further, he argued that Sarah wasn't looking for a job and that she was the one benefitting from the child support payments and therefore the Court should stay child support until such time as Sarah's timeshare was increased by the dependency court. This would have had the effect of "starving" Sarah out and really speaks volumes to the level of resentment that Jon was exhibiting - made ever more poignant for us by reflecting upon the degree of privilege from the extraordinary earnings that he enjoys. Again, a trial and appellate court would be reasonable in questioning his motives based upon all the economic circumstances, and in protecting the disadvantaged party consistent with the law. Which is exactly what happened in both courts. As a further expression of his overreaching (or that of his lawyers), Jon filed a new income and expense showing $474,861 in monthly earnings that averaged his income over the prior three years. While it is true that there is no fixed rule in what span of time courts review in determining income, still they are required to look to relevant evidence. Often times the prior 12 months provides this yardstick. 

Sarah's counsel rejoined that Jon's income over the past 12 months was $791,666/month. Sarah was apparently the tick on the back of the elephant. In addition, Sarah's visitation had been liberalized to include home visits. Sarah argued it would be nice for the boy to have a home where these visitations could occur. Also, she had monthly expenses of $13,271 and no income beyond CS.

On May 10, 2010, Judge Pellman ruled that no changed circumstances existed from the time of her earlier orders to modify support further. There still was no "exit order" from the dependency court. The proceedings had not resolved. Moreover, the finding was unavoidable that Sarah would lose her home without support monies to pay the mortgage. The judge ordered Jon to pay another $40,000 in fees to Sarah's attorney.  

Family Code section 4057(b) is an important provision that cuts both ways in terms of adhering to or departing from "guideline" support. That section states that the amount of child support that is presumed under our state-wide formula may be rebutted by showing that the amounts otherwise rendered by the guideline "would be unjust or inappropriate in [a] particular case." Increasingly attorneys for prime time parents are directing trial Courts to this section to support their claims that when custody is cut-off with the other parent, or severely restricted, that support should be zeroed out. For instance, the argument is frequently made, and sometimes accepted, that where the low earner parent has a de minimis timeshare that would otherwise result in some child support to them based upon the parties' respective incomes, that the de minimis timeshare parent should not receive child support because the prime time parent bears the substantial bulk of the financial burden. The problem with this analysis is that child related expenses for living accommodations are a fixed expense. Marriage of Cryer implicitly recognizes this reality, and Judge Pellman apprehended the paradox clearly.

Jon apparently made this argument - he told the appellate court that Judge Pellman had abused her discretion because "he had nearly total responsibility for the child." Indeed, Justice Boren agreed that "under normal circumstances, such a deviation from guideline support would be an abuse of discretion." But given Jon's income, these were not normal circumstances but not necessarily for the reasons that Jon urged. "The trial court was faced with a pending and uncertain dependency case over which it had no control...." "The trial court also faced the strong possibility that visitation and custody arrangements could change quickly,..." "Furthermore, while one parent enjoyed an extraordinarily high income and could easily afford to pay monthlyl child support of $8,000 or $10,000, the other parent had essentially no income, and would be unable to maintain a household of the sort to which the child was accustomed absent substantial support." Therefore, Judge Pellman did not abuse her discretion. 

The Court noted that although the child support formula, "a complicated algebraic" equation, is often referred to as "guideline" the term is "misleading. Instead, the formula yields "presumptively correct" numbers in all cases which may be rebutted by the particular circumstances of the parties and of the children. In this case the guideline presumption was rebutted consistent with the state policies that:

  • Placing the interests of child has been legislatively declared to be the state's top priorty
  • A "parent's first and principal obligation is to support his or her minor children according to the parent's circumstances and station in life
  • Each parent should pay for the support of children according to his or her ability
  • "Children should share in the standard of living of both parents and child support may therefore appropriately improve the standard of living of the custodial household to improve the lives of the children."

Here "an order that resulted in [the] child's spending time with his father in an opulent abode and time with his mother in a low-rent apartment would have conflicted with principles of Family Code section 4053."

Moreover, while the father "may have found the situation unfair, the primary focus must remain on the child's wellbeing, not the parents' feelings" about money. The revised $8,000/month child support order was only from 1 to 2 1/2 percent of Jon's mnothly income. Judge Pellman's order therefore also served to minimize the harm that might inure to the parties' son had each parent merely supplying living conditions based upon their respective incomes, without help from the other. Finally, the appellate court dismissed Jon's argument that he should not be obligated to pay $8,000 month where the mother's Income and Expense declaration showed that she only paid $4,999 in monthly housing relating expenses. The trial Court had discretion to look the broad view of the parties circumstances and was not required to fix a number based upon any one element of their total expense package.

Irmo Cryer is also an important case for ordering attorney's fees to financially weaker parties. Jon argued that the initial award of $20,000 was more than the mother's attorney had asked for in her moving declaration, but Mom's attorney made an oral request for a greater suma that the hearing based upon fees that had increased since the moving declaration had been filed, and her papers had noted that further fees would be incurred. Next Jon argued that he had won a motion for reconsideration that made him a prevailing party, and that he should not therefore been required to pay Mom's fees. Not so said the appellate court, "[b]ecause of the importance of ensuring that the parties both have the ability to present their cases effectively, attorney fees may be awarded against a prevailing party in family law proceedings."

I have had the great good fortune to have met Judge Pellman, and applaud her efforts and her well reasoned trial court decision!



TWA

 

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December 03, 2010
  ELKINS and New FAMILY CODE SECTION 217: How It AFFECTS YOU!
Posted By Thurman Arnold, CFLS

Elkins Task Force


The most important new rule in decades affecting the experience of California Family Law litigants is set to be unleashed on January 1, 2011. 

It promises a radical change in the way that all family court proceedings - whether they be dissolutions, legal separations, annulments, support applications, custody, and modifications of all of the above - are processed and decided by Superior Court judges and commissioners. 

This is a result of the Elkins Task Force, which has been quietly operating in the background of the California family law world since roughly August 6, 2007, when the game changing case of Jeffrey Elkins v. Superior Court (2007) 41 Cal.4th 1337 was decided by our California Supreme Court.

Elkins was a landmark decision which held that the Contra Costa County Superior Court could not through its local rules limit parties in marital dissolution actions to introducing evidence in written declaration form that had to be submitted in advance of trial, or prohibiting except in "unusual circumstances" one party from cross-examining the other about the contents of those declarations.  Such a rule, intended for the sake of calendar management and judicial economy, not only had the practical if unintended consequence of favoring parties with attorneys who understood how to work with these rules but fundamentally it violated due process by cutting off litigants' abilities to present all relevant, competent evidence on material issues.  Judges, as the triers of fact, are not able to assess witness demeanor and credibility without live testimony.

What is earth shattering about this decision in these economic times is that the Contra Costa Superior Court had urged that its policies and local rules were essential for the "expeditious resolution of family law cases."  Soon to be former Chief Justice Ronald George rejected this justification: 

        "We are aware that superior courts face a heavy volume of marital dissolution matters, and the case load is made all the more difficult because a substantial majority of cases are litigated by parties who are not represented by counsel.  [Reference omitted].... 

        In light of the volume of cases faced by trial courts, we understand their efforts to streamline family law procedures.  But family law litigants should not be subjected to second-class status or deprived of access to justice.  Litigants with other civil claims are entitled to resolve their disputes in the usual adversary trail proceeding governed by the rules of evidence established by statute.  It is at least as important that courts employ fair proceedings when the stakes involve a judgment providing for custody in the best interest of a child and governing a parent's future involvement in his or her child's life, dividing all of a family's assets, or determining levels of spousal and child support.... 

         Trial courts certainly require resources adequate to enable them to perform their function.  If sufficient resources are lacking in the superior court or have not been allocated to the family courts, courts should not obscure the source of their difficulties by adopting programs that exalt efficiency over fairness, but instead should devote their efforts to allocating or securing the necessary resources."

Justice George ended by directing the California Judicial Council to create a task force (the 'Elkins Task Force) "to study and propose measures to assist trial courts in achieving efficiency and fairness in marital proceedings and to ensure access to justice for litigants, many of whom are self-represented.  Such a task force might wish to consider proposals for adoption of new rules of court establishing state wide rules of practice and procedure for fair and expeditious proceedings in family law, from the initiation of an action to postjudgment motions.  Special care might be taken to accommodate self-represented litigants.  Proposed rules could be written in a manner easy for lay-persons to follow, be economical to comply with, and ensure that a litigant be afforded a satisfactory opportunity to present his or her case to the court."   Hence, the Elkins decision is essentially a Jeffersonian ruling that its intended to empower family law litigants and to require counties and courts to adapt.

The Elkins Task force completed its work and has issued lengthy recommendations. The first changes take place on January 1, 2011.  Possibly the most important change is embodied in Family Code section 217.  It states:

    "(a) At a hearing on any order to show cause or notice of motion brought pursuant to this code, absent a stipulation of the parties or a finding of good cause pursuant to subdivision (b), the court shall receive any live, competent testimony that is relevant and within the scope of the hearing and the court may ask questions of the parties.

    (b) In appropriate cases, a court may make a finding of good cause to refuse to receive live testimony and shall state its reasons for the finding on the record or in writing. The Judicial Council shall, by January 1, 2012, adopt a statewide rule of court regarding the factors a court shall consider in making a finding of good cause.

    (c) A party seeking to present live testimony from witnesses other than the parties shall, prior to the hearing, file and serve a witness list with a brief description of the anticipated testimony.

If the witness list is not served prior to the hearing, the court may, on request, grant a brief continuance and may make appropriate temporary orders pending the continued hearing."

Family Code section 217 will cause a sea-change in day to day family court proceedings across our state, unless family court judicial officers ignore it to the limited extent possible by court rules.  It will likely have immense financial and resource consequences upon not only the courts but upon parties to family court proceedings.  It will force the state government in coming years to study whole new paradigms for resolving divorce and domestic partnership dissolution outside the adversary template, including those currently practiced in New Zealand and southern Australia. 

It will also pressure parties to consider mediation, and collaborative processes which occur outside congested courthouses, much more carefully.  The costs of adversary litigation are about to sky-rocket, making mediation even more appealing from a financial perspective (I have written extensively about the emotional and psychological benefits here an elsewhere).  There simply is no governmental money available to absorb the coming Elkins Onslaught. For more information about an alternative method for resolving family disputes, please visit us at www.DesertFamilyMediationServices.com.
  
At the same time, at least in the short run taken together with some of the other revisions that become effective next month, it may encourage more people to litigate more stubbornly and so make mediation seem less attractive than it did before the changes (just the reverse will be true).  Some folks will mistakenly assume that this invites the use of court hearings as a live-testimony forum for sharing unresolved complaints relating to their marriage or domestic partnership dissolution with the other party in open court.  Instead, judges will sustain objections to such irrelevant material and parties who seek to use Family Court as a platform to air relationship grievances will find themselves alienating the trier of fact in ways that will have adverse consequences to them beyond just the time and expense of the exercise. 

The purpose of today's Blog is to introduce you to section 217 and the new changes.  I will follow up with more articles in coming weeks.  Without a doubt the new rules will make all the information I provide on my websites more relevant and timely for my readers. 


December is new legislation month at the Southern California Family Law Blog presented by Family Law Attorney Thurman W. Arnold. My goal is to inform you well, and early on, on any number of topics that will improve your outcome in family law matters and hopefully help you to reach results that are fair for you, your spouse or ex-partner, your children, and your blended and extended families.


T. W. ARNOLD, III, CFLS
(State Bar of California, Board of Legal Specialization)

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June 11, 2010
  What is a GAVRON WARNING and how does it affect my right to SPOUSAL SUPPORT?
Posted By Thurman Arnold
Q.  I was at our first court hearing last week requesting child and spousal support, and my husband's attorney asked the judge to give me a "Gavron Warning".  The judge said he would consider giving it to me at a future hearing and didn't go along with the lawyer, but I don't understand what this meant.  The judge did order my husband to pay child and spousal support.  What do I do if this comes up again?

A.     Gavron warnings deal with the question of when a supported spouse may be expected to become partially or totally self-sufficient, so that they can no longer be expected to rely on a former spouse for economic support.  At some point the entitlement to be supported usually ends. 

Where the court intends that party to become self-supporting by a given date, it generally must first give that person advance warning.  Marriage of Gavron (1988) 203 Cal.App.3d 705 is a relatively recent case which first articulated this policy.  This advance notice is now called the Gavron Warning.   It does not impact child support.

This represents a trend in the law away from a rule which once entitled a spouse (typically women) to lifelong alimony to a right to receive spousal support for only so long as necessary to become self-supporting.  It applies equally to men and women, and to domestic partners.  There is no question that this trend has gained legislative acceptance, and in 2000 Family Code section 4330 was enacted.  It provides in part: 

"(b) When making an order for spousal support, the court may advise the recipient of support that he or she should make reasonable efforts to assist in providing for his or her support needs, taking into account the particular circumstances considered by the court pursuant to Section 4320, unless, in the case of a marriage of long duration as provided for in Section 4336, the court decides this warning is inadvisable."

Note that this statute states the court "may advise" the support recipient to make reasonable efforts to assist in supporting themselves.  This means it is up to a judge to decide at any given stage oin any given case when and whether or not to give the warning.  One of the factors that the court must consider is the length of the marriage.  

Family Code section 4336 defines a marriage of long duration as 10 years or more.  There are cases that have decided that this 10 year rule is not inflexible, and that marriages of less than ten years may qualify for this protection where the facts warrant it (i.e., disability, domestic violence, the parties' respective ages).

The effect of the Gavron decision is to require that fair advance notice in fact be given before a court can properly terminate or reduce spousal support as of a specified future date.  The idea is that a supported spouse should not be punished for failing to meet the court's unrevealed expectation that they would become self-sufficient - absent this required advance notice it is judicial error to abruptly terminate an alimony order because of a failure to make good faith efforts to become self-supporting.

However, that notice need not be express - although it usually is.  For instance, your husband's attorney was competently (but aggressively) representing your husband by asking the court early on to give you an express warning.  He or she will probably ask again at every future hearing until the judge finally does give you the Gavron admonition.  That warning need not be in any magic formula:  It merely needs to clearly tell the supported spouse that they are expected to become self-supporting.  The classic language is contained in the FL-180 Judgment of Annulment, Legal Separation or Dissolution form and reads:  "It is the goal of this state that each party will make reasonable good faith efforts to become selfsupporting as provided for in Family Code section 4320. The failure to make reasonable good faith efforts maybe one of the factors considered by the court as a basis for modifying or terminating spousal or partner support."

Except in short marriages of less than 10 years, most judges will not issue Gavron warnings early on because during the early divorce process it is not reasonable that suddenly a homemaker should become self-supporting.  At the time a Judgment of Dissolution or Legal Separation is entered, however, and possibly except in cases of very lengthy marriages lasting 20 years or more (or where the parties are too old to be expected to retrain), most judges will give the Gavron Warning.

Additionally, Gavron language is often found in Marital Termination Agreements (also known as MSA's for 'marital settlement agreements').  Whether the language is included in the settlement agreements is a matter of negotiation between the parties.  As a recipient you want to resist it.  As a payor spouse, you want to insist upon it.  The longer the marriage, the less reasonable it is to include such language.  For instance, when I represent women over the age of 50 with marriages in excess of 10-15 years, I counsel my client not to permit it.  On the other hand, if I am representing the high earner spouse, I always argue for its inclusion.  This is one of those subtle areas where having the right attorney for you can make a huge difference in your future security.  However, as you may have noted above the language has become so standard now that it is included in the FL-180 Judgment form and be used for or against you even if you never read that piece of paper (one you don't sign).

In answer to your question what to do when this comes up again, urge the court that this is too soon and too early, and not reasonable given that you have devoted your married life to child-rearing and to helping your client develop the career that you both once believed would support the family until retirement and ultimately death.

This is just an overview of the Gavron effect.  I will give more education on the topic in future blogs.


T.W. Arnold III 
http://www.DesertDivorceandFamilyLawyer.com


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May 26, 2010
  What is FAMILY SUPPORT?
Posted By Thurman Arnold
Q.  My lawyer mentioned something called "family support" as a way to possibly get more money from my ex-husband for child and spousal support.  What exactly is family support and does it work?

A. Family Support is mentioned in two California Family Statutes - section 92 and section 4066.

In theory family support allows parties, by agreement, to characterize both child support and spousal support together.  The spousal and child support components are unallocated, and the total sum is a combined number.

The purpose of family support is to create a deductibility for child support for federal and state income tax purposes that otherwise does not exist.  One hundred percent of family support is potentially deductible by the payee and must be picked up as taxable income by the recipient.  However, as mentioned at the bottom of this blog, there is some uncertainty whether the IRS will in fact allow this deduction.

While this may seem to be a bad deal for the supported spouse, this is not at all true in certain circumstances.  If the supported spouse has no other taxable income, depending upon what the family support number is that person may pay little or no taxes on the combined sum while the payor obtains the benefits of total deductibility.  If there are little adverse tax consequences to the party receiving family support but the party paying is substantially better off net after taxes, then family support is something divorcing spouses might want to horsetrade.  Since the payor is receiving a benefit, they may well be willing to pay to the supported spouse a higher combined family support award than they would if it was broken down into deductible spousal support and non-deductible child support. 

In this way, more money becomes available for both families - and particularly for children - and less money goes to the government.

One caveat - family support is clearly deductible for purposes of the California State Taxes.  However, at least one federal tax court decision has invalidated a family support order in terms of its deductibility (Wells v. Commissioner).  In that case mistakes were made in the drafting of the family support provision in that it was not stated that support would terminate upon the death of the payee (a requirement for deductible spousal support) and, more important, the cessation of payments was contingent upon events which were associated with the parties' children (i.e., turning 18 or graduating high school) - another major no-no for securing deductible alimony.  I have separately blogged deductibility of spousal support.

Hence, before agreeing to family support (particularily if you are the payor, since if you are the payee you may find you actually had no tax liability after all and so the recipient may not be hurt while the payor is) you need to ask your lawyer or a tax accountant for their opinion on the current deductibility of family support, and you need to be sure the agreement is carefully drafted - including a provision that allows the parties some remedy if, for instance, the recipient fails to report the family support as income or if the deduction comes to be disallowed.

Since family support is a dicey proposition, it probably should not be considered until the IRS has given clearer directions that protect you.

Thurman W. Arnold
http://www.ThurmanArnold.com    
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April 13, 2010
  How Do I Defend a Request by My (Former) Spouse to SET ASIDE our Support Orders?
Posted By Thurman Arnold
Q.  My former spouse claims that I lied on my Income and Expense Declaration and filed a motion to set aside that order, and is now seeking more money.  What are my rights?


A.  This type of support modification can occur in two situations:  Where it is alleged that you aren't paying enough because you committed some fraud or where you alleged you are paying too much because the other party committed some fraud in connection with an Income and Expense Declaration [FL-150] or some other sworn pleading filed with the Court.

If you are defending a support set aside motion, there are three bits of law you need to know.

First, there are important time limitations on when a motion must be filed before a Court will set aside a prior support order.  As action based upon fraud or perjury must be brought within six months after the date on which the complaining party discovered or should reasonably have discovered the fraud or perjury.  Family Code section 3691.

Second, the moving party must convince the trial court that all the other party has established is that it was a) inequitable when made or b) subsequent circumstances caused the the supported ordered to be inadequate or excessive, but that nothing more has been proved that that those grounds are insufficient by themselves.  Family Code section 3692.

Third, on April 8, 2010, the case of In re Marriage of Zimmerman was decided and certified for publication and it is the first reported California appellate decision to squarely address these family code provisions.  You will want to cite this case to the judge.

In Zimmerman a mother and former wife filed a motion to have all child support recalculated going back some five years, on the ground that the father had committed fraud and perjury with respect to prior order by concealing income in his earlier FL-150's.  However, because of facts alleged in earlier pleadings she had filed with the Court a declaration making reference to these very same claims, the trial court was affirmed when it found that more than six months before she filed the Motion she had discovered or reasonably should have discovered the alleged fraud and perjury.

This is a very important case in this area because family law litigants are frequently claiming in their papers that the other side is lying or concealing information.  This case stands for the proposition that it is unwise practice to even mention these claims prematurely, because if one does then the defending party will point to those statements - 'you see, she knew she had this claim two years ago.'  It is always unwise to make statements to the Court about dishonest conduct on the part of the other side where there is no solid proof, yet, in any event. 


Thurman W. Arnold III
http://www.ThurmanArnold.com 
4/13/10
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April 13, 2010
  What Are My Rights When I Believe My Spouse Committed Fraud in Their Income & Expense Statement?
Posted By Thurman Arnold
Q.  What remedies do you have if you believe your spouse concealed income or lied about assets in their Income and Expense Declaration [Form FL-150]?


A.      The FL-150 Income and Expense Declaration must be filed by each party in every California family law case involving requests for money (whether support or attorney fees), and it must accompany the FL-142 Schedule of Assets and Debts that is part of the Preliminary Declaration of Disclosure that must be exchanged in all action for dissolution of marriage or domestic partnership, legal separation, and annulment.  In addition, Rule of Court 5.128 requires these Income and Expense Declarations to be current, which means they need to be updated so that they are, generally speaking, not more than 90 days stale.

Family Code section 3691 sets for the grounds and time limits for filing a Motion or OSC to set aside and correct an order for child support or spousal support which was obtained by your present or former spouse, or the other parent.  You need to be very careful with these time limits, because they are shorter than other set aside remedies contained in the Family Code (for instance, Family Code section 2122 dealing with property settlements and judgments).  It is important get the applicable code sections right, because different time limits apply for seeking relief from the Court.

Family Code lists the grounds for a support set aside as a) actual fraud; b) perjury; and c) lack of notice.

a)  Fraud - this occurs when 1) the defrauded party is kept in ignorance or 2) in some manner other than their own lack of care or attention was fraudulently prevented from fully participating in the proceeding.  This set aside ground is different from perjury.  It applies to a situation, for instance, where you were told that your spouse was not seeking certain orders and so you failed to attend to the hearing only to learn later that in your absence much broader relief was requested than represented.  It also applies any time information is provided by the other side that was materially false and when you relied on that false information not knowing that it was false (for instance, a party fails to disclose another job, much higher earnings, or property).

b) Perjury - where the other side has simply lied outright under oath in their Income and Expense Declaration or in the supporting verified application.  Be sure to allege fraud as well since a perjurious statement is often a fraud.

c)  Lack of Notice - this generally applies to situations where the other side claims you received notice of the proceedings but in fact you were not served.  This can be difficult to prove where a proof of service was filed with the Court which itself is perjurious (i.e., your husband's best friend he claims he hand delivered to the documents to you on a day you were in New York).

This section applies equally to orders which were way too high based upon any of the above grounds as those that were way too low.

Family Code section 3691 will not help you in situations addressed in Family Code section 3692, where your support order was merely unfair or subsequent circumstances caused the order to be excessive or inadequate. Section 3692 is your first argument in defending a support order set aside motion.

In any of the above cases, you must file your motion within six months of the time you discovered or reasonably should have discovered the fraud, perjury, or reasonably adequate notice of the order.


Thurman W.  Arnold, III
California Family Law Attorney


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March 25, 2010
  What is GUIDELINE SUPPORT in California?
Posted By Thurman Arnold

Q.  How is child support calculated in California?  I have heard about "Guideline Support" but am wondering what this means?


A.  In 1993 California adopted a Statewide Uniform Guideline to come into compliance with a federal mandate.  (Family Code section 4050).  This followed wide variability of orders and a prior failed attempt to ensure predictability.  Its effect was to greatly increase the monies available to children and to begin to end gender bias in assessing support.    Family Code section 4052 requires California court Commissioners to adhere to the uniform guidelines and to "depart from the guideline only in special circumstances...." 

Family Code section 4053 lists principles to be followed by the Court in implementing the guidelines.  This is a statute worth reviewing, and using to remind family court judges of what our State child support policy is.  These include the directives that:

(1)  A parent's first and principal obligation is to support their minor children "according ot the parent's circumstances and station in life."

(2)  Both parents are mutually responsible.

(3)  The guideline must take into account each parent's actual income and the level of responsibility for the children.

(4)  "Each parent should pay for the support of the children or according to his or her ability."

(5)  The interests of children are the State's top priority.

(6)  Children should share in the standard of living of both parents.  Child support may therefore be appropriately used to increase the standard of living of the custodial household to improve the lives of the children.

(7)  Disparities of living standards in both homes, particularly where both parents have high levels of responsibility for raising the children, should be minimized through the use of guideline child support orders.

(8)  A parent having primary physical responsibility for the children (a term that is nowhere defined in the Family Code) is presumed to be contributing a significant portion of their available financial resources to the support of these children.

(9)  The guideline is intended to encourage settlement between parents by creating predictability.

(10)  The guideline is presumptively correct in all cases, and ony in special circumstance should child support orders be less than guideline.

(11)  Child support orders must reflect the greater standard of living and costs of living in California as opposed to other states. 

California Family Code section 4055 sets forth the formula for assessing guideline support.  Don't even bother to look at it, you will need to be a mathematician or logics teacher to understand or explain it.  While gross income numbers (or imputed income) are used, the guideline tax effects this income so that net income is generally what is determinative - however, this complicates doing the math.  The percentage of parent's income allocated to children is called the "K" factor, and this number moves depending upon how many children there are.  It assumes, for instance, that 26% of the joint income of most families is spent on families with one child, and 60% where there are three children.  Forturnately these calculations are done for us through computer programs.  The most common are the Dissomaster and Xspouse, which I will explain further in another blog.  Riverside County in Indio utilizes the Xspouse.  The Xspouse is a spin off from the people who devised the Dissomaster, after they had a parting of the ways.

Child support always takes precedence over spousal support, or personal expenses.  Relative timeshare between the parents is a major factor in using the formula - the higher the noncustodial parent's timeshare, the less they pay. 

Unfortunately this means in practice that there is much legal wrestling between parents about timeshare that has nothing to do with the children's best interests but often everything to do with economic warfare.  I write about this in separate articles detailing Collaborative Law processes where we attempt to refocus parents on best interests rather than legal rights (per the guideline formula, for instance) so that primary parent's (often mothers) will give up more custodial time and fathers will pay a little more for this time and then actually undertake using that time (as opposed to having it on paper in a court order, but generally ignoring the increased responsibilities).  Please see this link to our Collaborative Divorce Team.

Importantly, even when courts order child or spousal support to women, studies have shown that most children who are entitled to child support from their fathers never receive it (Huang, Mincy, and Garfinkel, 2005). There may be a number of reasons for this. One determinant of fathers meeting these obligations is their ability to pay.  Researchers have found that when child support obligations exceed 35% of a father' sincome, he is less like to comply (Meyer and Barfeld, 1996).  Lower earner fathers are generally required to pay a higher proportion of their income in child support in child support than higher earners, which pressures the poorest members of our society (Huang, et al., 2005).

Women in heterosexual relationships, as single parents (or child-caretaking partners), are at greatest risk of becoming systemically impoverished (Strong, et al., 2008). Following divorce, women are principally responsible for both child-rearing and their own economic support. At a minimum a woman may suffer a significant decrease in her financial condition. Studies have shown that a single mother's income may decrease by twenty-seven percent or more.  (Peterson, 1996; Smock, 1993).  [Please contact me if you want the actual citations to these studies].

These realities may or may not interest you.  They do affect children and parents in very deep ways, nonetheless.

In any event, now that you have the background I will provide more detailed information on how the Xspouse and Dissomaster programs work in practice very soon.  Try using our search engine at the upper right corner of any page on this site and you will find those articles when they are up.

TWA


Thurman Arnold is a child support attorney practicing in Riverside and San Bernardino Counties, including the cities ranging from Blythe, Indio, Indian Wells, La Quinta, Palm Desert, Rancho Mirage, Palm Springs, Desert Hot Springs, Joshua Tree, Hemet, San Bernardino and Riverside, CA.

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March 24, 2010
  I am remarried. How does my NEW MATE'S INCOME affect my SPOUSAL SUPPORT or CHILD SUPPORT OBLIGATION?
Posted By Thurman Arnold

Q.  I remarried in August, 2009, and my new wife is a doctor.  She has one child from her prior marriage and I have two.  I am still paying my former wife alimony and child support even though the kids we have together live at our home 40% of the time.  I have been hit hard by the economy and we largely depend upon my wife's medical income to make ends meet.  Now my ex is threatening to take me back to court to increase my support based upon my new wife's income, while my own income is down from when the court last decided it.  My new wife is upset at the idea that my ex can learn anything about the medical practice or income.  What should I do?

A.  If there has been a material decrease in your income since the time of your last order, you may safely file a support modification motion to lower your child support and to lower or possibly terminate your spousal support.  Whether that is advisable based upon your numbers has nothing to do with your new mate's income, and should not cause you to hesitate - but again, it does depend on the actual respective numbers between you and Wife 1, which you did not provide me.  You also need not worry about W1 filing a motion to increase (you can't stop her, but she will not win based on W2's earnings).  Maybe you should give her this link so she will think twice.

California law is quite clear that new mate income cannot generally be considered against you in ordering or modifying child or spousal support.  The controlling California Family statute is section 4057.5.

In the normal situation, Family Code section 4057.5 leaves the Court no discretion to consider your new wife's earnings, period.  You do not need to report those earnings on your FL-150 (Income and Expense Declaration). This is a statement of California legislative policy effective in 1993 when this section was added to the Family Code.  This is true for both spousal and child support.

However, section 4057.5 does contain an exception for the "extraordinary case" which the statute makes clear is intended to address situations where "where excluding that income would lead to extreme and severe hardship to any child subject to the child support award" or where "a parent ... voluntarily or intentionally quits work or reduces income, or who intentionally remains unemployed or underemployed and relies on a subsequent spouse's income."  Even if the court were to find a severe hardship on the children of marriage number one, it would be required not to impose a severe hardship on your wife's child by reallocating her income to you for purposes of supporting your two children. 

In practice, so far, Courts almost never find facts sufficient overcome this clear statutory prohibition.  So far there is no published California appellate decision defining these extraordinary circumstances.  No doubt one day someone will so abuse this protection and hide behind it that we will get a reported decision that fleshs out how bad someone needs to behave before the protection is lost.  But "extraordinary" means really extraordinary.  In the average case, your new Wife has nothing to be concerned about. 

With regard to attorneys fee awards, however, there is authority for an argument that new mate income may be considered in granting or denying an attorney fee request, but the odds are against a judge doing that.

Incidentally, this section also applies to income from nonmarital partners as well as new spouses.  In one reported case (IRMO Loh), a trial court was reversed for inceasing dad's child support obligation after the mother produced photos of the father's "lifetyle" to show imputed nontaxable income in the form of his new girlfriend's contributions to him, since she paid for all his toys. 

The new mate question is a subset of the "imputed income" situations where a father or mother may quit work or reduce hours because they are relying on their new mate to contribute the difference.  That is not likely going to be an extraordinary case, but  W1 can separately seek to impute income to you on the basis that you have a higher earning capacity than you are exercising.  Earning capacity and imputed income is a blog for another day.  Also, I will mention here that another argument exists in favor of W1 that has nothing to do with the right to obtain the records or income of W2:  Equalizing the lifestyle's of the two households where yours is rich and grandiose and W1 is impoverished (an extreme example) pursuant to FC section 4057(b)(4).

The tax returns are privileged as they relate to your new wife's medical practice.  For instance, if she is a medical corporation (which I recommend be set up), she will almost never be forced to divulge those records.  Even as to your joint returns, you may be entitled to redact the information concerning your new spouse or have the Court review them in camera (meaning they are not turned over to the other side).  Your former mate is entitled to see your side of the tax returns, however, and they are not insulated from scrutiny simply because you filed joint with the Doctor Wife.  If you don't file jointly, your former wife will almost certainly never get her hands on your new wife's Married Filing Separately (MFS) returns.  Structuring things this way may or may not be advisable and you should consult a tax accountant.

An interesting twist here is that because you marry a higher, wealthy earner, your taxes actually increase because under federal IRS (and the California FTB), you are responsible for one-half of your new mate's income - and this is true even if you don't file jointly.  One case (County of Tulare vs. Campbell) has held that this additional tax you become liable for can form the basis for a reduction in your support because you have less net income available for support after the tax hit is deducted.  Hence, based on these tax consequences you may have an additional argument for decreased support - although a Court may try to deny you some discretionary offset to even the score since this feels a bit unfair to the spouse who is  primarily supporting the children and so lessen the downward modification.

The take-away:  So long as you are not playing games, have not intentionally reduced your income by relying upon your new mate's income, and there is no really extraordinary difference in the two households, your new wife's income is just not relevant and so it is protected.

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December 28, 2009
  What is permanent SPOUSAL SUPPORT in California?
Posted By Thurman Arnold

Q.  What rights do I have to permanent spousal support?

A.  Permanent spousal support is not usually "permanent," although it can be in cases of very long marriages.  Lawyers and judges also refer to it as post-judgment spousal support, alimony, judgment spousal support, or long term support.

Unlike temporary spousal support, long term spousal support is only issued after a final judgment of Dissolution of Marriage or Legal Separation.  It is equally available to domestic partners.  Also unlike temporary support, it is not based on any computer formula or state or county guideline, but must be determined and fixed depending on the facts of every individual case.  If long term support is important to your future wellbeing, you are going to need an experienced support attorney.

There are several very important rules to keep in mind.  First, a marriage in California which lasts more than 10 years (defined as the time between date of marriage and physical separation), is "long term" marriage.  The general rule is that in marriages which are not long term, spousal support should not be payable for more than one-half the length of marriage - or to put in differently, the law presumes that the recipient spouse should be rehabilitated and so become self-supporting in a period equal to 1/2 the marriage.  However, this presumption becomes less important in cases involving older couples, especially where people can not be realistically expected to re-enter the work force, in cases where there children who remain minors, or where the party asking for support has a debilitating disease or disability.

There is no magic ratio for how long a former spouse might be ordered to pay long term support.  Each case depends upon its own facts, the quality of your attorney, and the attitudes of the family court judge.  Even in cases of long term marriages, the support obligation typically will end at some point in time.  However, if usually will not end on its own - meaning that when a trial court orders long term support it will reserve jurisdiction to continue to extent it, until some time when a party petitions the court to terminate support and a judge finally says "enough is a enough." 

Imputed income is often an important argument in long term support marriages, where one party convinces the court that the other party is shirking or failing to genuinely try to become self-supporting.  It is sometimes necessary to have the supported spouse evaluated by a vocational rehabilitation expert. 

There are four components to an award of of permanent support:  1) Amount; 2) duration; 3) substantive increases or decreases over time; and 4) jurisdictional step downs and ultimately a termination date.

Second, Family Code section 4320 is a critical support statute.  I have provided a link and uploaded it so that you may read it.  Essentially it sets forth all the factors that the court must consider in setting post-judgment support, and you will see that it is not an exhaustive list and the court can consider anything else it deems important to the decision.  Support factors include the extent to which the earning capacity of each party is sufficient to maintain the marital standard of living established during the marriage, considering:  a) the marketable skills of the supported party, the job market for those skills, the time and expense required to train that party including education and b) the extent to which the supported party's present or future income earning ability is impaired by periods of unemployment or were incurred during the marriage to permit that party to devote time to domestic duties.

Another factor is whether the supported party contributed to the attainment of an education, training, license, career, or position by the supporting party. 

Another factor is the ability of the supporting party to pay, taking in account that person's earning capacity, income, and assets and standard of living.

Another very important support consideration is the needs of each party - including both. 

Another factor is the obligations and assets of each spouse, including the separate property which each has or gained upon the dissolution.

Another is the ability of the supported spouse to engage in gainful employment without interfering with the needs of dependent children in their custody.

The age and health of the parties is critical in some cases.  65 years of age is the presumed retirement age for adults today, and courts cannot order a person to continue to be employed beyond that age - but, if they make that choice, their income can be considered.

A documented history of domestic violence can affect the right to receive support or the obligation to pay it.

The tax consequences between the parties must be considered.

And, basically, as I said, any other specific facts that trend one way or another.

The three most common factors are the marital standard of living (MSOL), need and ability to pay, and the assets the parties end up with upon divorcing.

Courts cannot order lump sums for support.  Spousal support is generally taxable to the recipient and deductible to the payor, but there are very specific IRS requirements that must be met for this to actually be so.

Courts are required to state their findings on each relevant issue in writing.  In practice though, most people settle their divorce cases by way of settlement agreements.  Unfortunately, lawyers often leave out these findings so that when a court is asked, down the road, by the payor to terminate or decrease support, or by the payee to increase it, there is no map for the court to use to base its modification findings on.

If support is an issue for you either way, please hire a competent lawyer.  There are many attorneys moving into family law from civil practices who are clueless about these things.  Caveat emptor!

 


 

 

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