Modification of Support

Modification of Support

Hon. Patti Ratekin

Peter M. Walzer, CFLS

General Principles

Modification of Support

General Principles of Modification

What is Modifiable

CS orders modifiable regardless of agreement of the parties (any attempt to limit court’s jurisdiction = void order)

Family support orders are modifiable

Reduction or termination orders must not violate IRC restrictions

Make sure you know tax benefit/detriment

Modifiable into separate orders for child & spousal support when change of circumstances in CS only

General Principles of Modification

What is Modifiable (cont’d)

Temporary SS awards are modifiable, except as to amounts accrued prior to filing of RFO unless parties stipulate otherwise

Conflict in law re: change of circumstances required

Zinke v. Zinke(1963) 212 Cal.App.2d 379 (no COC)

Marriage of Tong and Samson (2011) 197 Cal.App.4th 23 (COC required)

Permanent SS awards are modifiable unless MSA precludes modification

General Principles of Modification

Child SupportModification

2017 Advanced Family Law Course

Jurisdiction

Personal jurisdiction required to make child support order (Kumar v. Superior Court (1982) 32 Cal.3d 689)

Superior Court has jurisdiction to order child support in Family Code proceeding (Fam C 2010)

Continuing exclusive jurisdiction until all parties have left state or consent in writing (Fam C 5700.205)

General Principals of Modification

What to Determine at CS Mod Hearing

At date of hearing on modification, determine

Income of both parties (imputed or actual)

Bonus income

Assets

Termination of CS

Deviations from CS guidelines – i.e. extraordinary high earner exception

CS add-ons

General Principles of Modification

What to Determine at Mod Hearing (cont’d)

At date of original order or prior and current hearing consider

Hardship deductions

Retroactivity of requested order

Military service issues (appointment of SCRA counsel)

Any limitations

oDCSS involvement

oContempt adjudications

General Principles of Modification

Change of Circumstances

If guideline child support, change of circumstances required

Marriage of Cheriton(2001) 92 Cal.App.4th 269

If stipulation and no findings, court may modify

Marriage of Thomas (1981) 120 Cal.App.3d 33

If below guideline, no change of circumstances required

Fam C 4065

If above guideline, material change of circumstances required to modify

Marriage of Laudeman (2001) 92 Cal.App.4th 1009

Marriage of Cohen (2016) 3 Cal.App.5th 1014

General Principals of Modification

In re Marriage of Bodo (2011) 198 Cal.App.4th 373 (CA-6)

10-2006: Parties entered into stipulated judgment for above guideline CS – H’s income $33K/mo

$7K/mo CS for 4 children

2008: RFO to modify CS

H testified that at time of stipulated judgment he knew

He would have to "sell IRA" to pay support

He would have to sell assets to pay equalizing payment

Change of Circumstances

Marriage of Bodo (cont’d)

T/Ct found no substantial change in H’s income – substantial change in visitation

CS reduced to $6,178/mo

H argued that the T/Ct used the wrong legal standard, substantial change of circumstances vs. material change of circumstances

CA-6: AFFIRMS

A “material” change in circumstances is the same as a “substantial” change in circumstances for the purpose of modifying child support

Change of Circumstances

UIFSA: Fam C 5700.205

Uniform Interstate Family Support Act

Resolves jurisdictional issues involving spousal and child support

General rule: As long as one parent or child remains in this state, this state has continuing, exclusive jurisdiction

General Principles of Modification

Modification Out of State Orders

UIFSA does not preclude modifications of out-of-state support orders

It does, however, enact strict requirements before that can occur

(1) The out-of-state order has been registered [registration is not required for simple enforcement]

(2) The petition seeking modification is verified and provides the essential information required by Fam C 5700.311, and

(3) The respondent is subject to the personal jurisdiction of the tribunal of this state

General Principals of Modification

Imputed Income for CS

Child Support Modification

In re Marriage of Eggers (2005) 131 Cal.App.4th 695 (CA-4(3))

H fired for cause due to misconduct from Edison

Received unemployment compensation

T/Ct imputed income – CA-4(3): REVERSES

T/Ct may impute income to a parent based on his or her earning capacity if the amount of income imputed is supported by evidence of opportunity and ability to work reflecting that level of income

Imputation Income

In re Marriage of Cheriton (2001) 92 Cal.App.4th 269 (CA-6)

T/Ct imputed income to custodial parent

H had $45M Cisco stock at time of trial

Record contained substantial evidence of W’s earning capacity

W argued not in C’s best interest to impute to her

CA-6: REVERSES – No authority permits a court to impute earning capacity to a parent unless doing so is in the best interest of the children

Imputation of Income

Marriage of Cheriton(cont’d)

Unlike a child support order, however, a spousal support award does not require the court to consider the children's best interests

See also: Marriage of Ficke(2013) 217 Cal.App.4th 10

Imputation of Income

In re Marriage of Bardzik(2008) 165 Cal.App.4th 1291 (CA-4(3))

The burden of proof

Is upon the party seeking to modify the order

Child support case

Both parties work for Sheriff

M retired, F seeks to impute income, but offers no evidence of ability to earn

Effort toward Self-Sufficiency

Marriage of Bardzik(cont’d)

T/Ct refused to impute income without evidence of ability to earn

CA-4(3): AFFIRMS

Burden of proof on moving party to show ability and opportunity to earn

Effort toward Self-Sufficiency

Marriage of Bardzik(cont’d)

Query: Would it have been M’s burden had there been a support order and she retired prior to usual retirement age?

Remember to impute income, court must find that it is in children’s best interest

Marriage of Paulin(1996) 46 Cal.App.4th 1378 (CA-1(5))

Initial CS order based upon income of M

M terminated employment stating questionable recordkeeping practices

T/Ct imputed income based upon salary earned at that job

T/Ct upheld in imputing income to M based upon prior employment based upon the incomplete record

Imputation Income

In re Marriage of Wilson & Bodine(2012) 207 Cal.App.4th 768 (CA-4(3))

8-2001: M and F had C-1 prior to marriage, CS order for $1,600 in paternity case

6-2003: C-2 born

12-2005: Parties married, separated in 1-2008

M files for disso: Status only judgment entered in 2009

Child Support Modification

Marriage of Wilson & Bodine (cont’d)

F files OSC in paternity case to modify CS and determine arrearages

DCSS tells him he owes over $150K in arrears

T/Ct orders F to pay support

From time of order until the parties began living together

And after DOS

Child Support Modification

Marriage of Wilson & Bodine (cont’d)

F appeals

Portion of order requiring him to pay arrearages after DOS was extinguished under Davis v. Davis (1968) 68 Cal.2d 290

CA-4(3), relying on Davis: Held that paternity order re CS was nullified, not extinguished or abated, and remanded to T/Ct

Child Support Modification

Marriage of Wilson & Bodine (cont’d)

The decision relied upon Schaff v. Schaff(N.D. 1989) 446 N.W.2d 28

In this North Dakota opinion, the court held that there is no meaningful distinction

Between a paternity judgment and a dissolution judgment

Child Support Modification

Child Support Modification

Child Support Modification (cont’d)

Deviating from Guideline CS

Child Support Modification

California Rule of Court 5.260

(b) Deviations from guideline child support in orders and judgments

(1) If a party contends that the amount of support as calculated under the statewide uniform guideline formula is inappropriate, that party must file a declaration stating the amount of support alleged to be proper and the factual and legal bases justifying a deviation from guideline support under Family Code section 4057.

Deviation Guideline

California Rule of Court 5.260 (cont’d)

(2) In its discretion, for good cause shown, the court may deviate from the amount of guideline support resulting from the computer calculation. If the court finds good cause to deviate from the statewide uniform guideline formula for child support, the court must state its findings in writing or on the record as required by Family Code sections 4056, 4057, and 4065.

(3) Stipulated agreements for child support that deviate from the statewide uniform guideline must include either a Non-Guideline Child Support Findings Attachment (form FL-342(A)) or language in the agreement or judgment conforming with Family Code sections 4056 and 4065.

Deviation Guideline

In re Marriage of Cryer (2011) 198 Cal.App.4th 1039 (CA-2(2))

M and F married with one child – F is actor in “Two and a Half Men”

Judgment provided F with 35% timeshare

M receives $10K/mo CS

Dependency action filed and child placed with F

M had supervised visits

Marriage of Cryer (cont’d)

F seeks to reduce CS to $-0-

Marriage of Cryer (cont’d)

12-2009: T/Ct reduces CS from $10K to $8K (guideline $1,141) and finds

Custody could change quickly (M’s timeshare reduced to 4%)

Child’s best interest is to return to M’s home

F enjoyed extraordinarily high income, could easily afford to pay child support

M would be unable to maintain a household without support

Would be unjust and inappropriate under circumstances to reduce CS to guideline

Marriage of Cryer (cont’d)

T/Ct denies F’s requests for reconsideration and trust for CS that he gives to M

At review hearing, F argues

M failed to seek employment

No additional custody

Requests stay

Marriage of Cryer (cont’d)

Review hearing set – AF’s and seek work order

At review hearing M argues

F underreporting income

Visitation was modified to home visits

M has $13K in monthly expenses

T/Ct finds no change of circumstances since 11-2009 hearing

F to pay $40K more towards M’s legal fees

F appeals

Marriage of Cryer (cont’d)

CA-2(2): AFFIRMS

Potential for quick custody/visitation change

Great disparity in income

F’s extraordinarily high income entitled child to more guideline support (even if it benefited M)

oCS allows child to live in familiar surroundings

Focus on C’s best interests

In re Marriage of McHugh(2014) 231 Cal.App.4th 1238 (CA-4(3))

While deliberate avoidance of family responsibilities is a significant factor in the decision to consider earning capacity for purposes of imputing income to CS obligor

The imputation statute explicitly authorizes consideration of earning capacity in all cases, consistent with the child’s best interests [Fam C 4058(b)]

Marriage of McHugh (cont’d)

On an application to modify CS by imputing income to a parent based on earning capacity

The burden of proof as to ability and opportunity to earn imputed income changes depending on which parent—the payor or the payee—is seeking to change the status quo [Fam C 4058(b)]

In re Marriage of Sorge (2012) 202 Cal.App.4th 626 (CA-4(1))

3-28-03: MSA Wyoming

11-21-05: registered San Diego

8-24-07: W files RFO to modify custody, visitation, CS, AF’s, SS arrears

H’s income $10,980 salary, $224,867 dividends and interest, $426,556 investment and ordinary losses

M worth $14M – no debts

Marriage of Sorge (cont’d)

F sold business

$10K/mo salary + $224K/mo in dividends interests

$426K losses; $62K expenses

M and F hire joint forensic (JF) who prepares reports

(1) Includes losses, and

(2) Does not include losses

Marriage of Sorge (cont’d)

T/Ct declined to consider operating expenses of start up companies in determining H’s income

Noted H maintained affluent even wealthy lifestyle despite losses

H’s losses haven’t hampered his lifestyle

H may not invest in businesses and minimize his support obligation while he maintains wealthy lifestyle

Marriage of Sorge (cont’d)

Per Marriage of Berger (2009) 170 Cal.App.4th 1070, H cannot unilaterally and voluntary arrange his business affairs to effectively preclude his children from sharing in the benefits of his current standard of living

CA-4(1): AFFIRMS

Fam C 4058(a)(2) does not require deduction of losses for business to lower CS while maintaining wealthy lifestyle

Not Income for CS

Child Support Modification

Fam C 4057.5

New mate income not considered

Extraordinary case – extreme & severe hardship to child

Parent voluntarily or intentionally quits work or reduces income and relies on spouse

Limit on discovery to new mate’s W-2 and 1099

Hardship for stepchildren

Child Support Modification

Relief from CS

Child Support Modification

CS Enforcement Fairness Act of 2000

Fam C 3690-3691: Relief after CCP 473’s 6-mos limit

Grounds for relief material to original order & moving party benefits

Actual fraud – 6 mos after discovery

Perjury – 6 mos after discovery

Lack of notice

Relief after default

Payee must provide affidavit that service not avoided nor inexcusable neglect; if good service made, no relief

Jackson v. Jackson (1975) 51 Cal.App.3d 363 (CA-2(2))

Parties married/divorced, CS order issued

Writ of execution issued to collect CS arrears

H filed motion to quash based upon fact that C lived with him and he directly discharged his support obligation. "Jackson credit"

T/Ct quashed writ permitting only partial enforcement of arrears

Court appropriately allowed only partial enforcement, F had directly discharged his obligation or on the basis of equitable considerations

Credits

Helgestad v. Vargas (2014) 231 Cal.App.4th 719 (CA-4(3))

In-the-home CS during a period of living with the children can count as credit against an ongoing support order that is framed only in monetary terms

However, the payor spouse necessarily has the burden of showing the provision of actual in-kind or in-the-home support

This case extended "Jackson credits" to paternity cases

Use of Assets in Calculating CS

Child Support Modification

Mejia v. Reed (2003) 31 Cal.4th 657

Assets at the time of dissolution play little part in the computation of child support

They may enter indirectly into the calculation in two ways

(1) In assessing earning capacity, trial court may take into account the earnings from invested assets [see, e.g., Marriage of Cheriton], and

(2) [A] court may deem assets a ‘special circumstance’ (. . . §4057, subd. (b)(5)) that may justify a departure from the guideline figure for support payments.

But these are exceptional situations; the child support obligation is based primarily on actual earnings and earning capacity

Child Support Modification

High Income Payor

Child Support Modification

Fam C 4057(b)(3)

(b) The presumption of subdivision (a) is a rebuttable presumption affecting the burden of proof and may be rebutted by admissible evidence showing that application of the formula would be unjust or inappropriate in the particular case, consistent with the principles set forth in Section 4053, because one or more of the following factors is found to be applicable by a preponderance of the evidence, and the court states in writing or on the record the information required in subdivision (a) of Section 4056

(3) The parent being ordered to pay child support has an extraordinarily high income and the amount determined under the formula would exceed the needs of the children

High Income Payor

S.P. v. F.G. (2016) 4 Cal.App.5th 921 (CA-2(5))

M claimed proposed needs for CS of $70K/mo

The parties stipulated that DissoMaster guideline support was $40,882 per month

T/Ct deviated from guideline and ordered F to pay CS of $15K/mo

High Income Payor

S.P. (cont’d)

T/Ct ordered F to make direct payment for

Medical insurance premium

Private school tuition

School expenses

Reasonably incurred expenses for extracurricular activities

M appeals

High Income Payor

S.P. (cont’d)

CA-2(5): AFFIRMS

It is the burden of high income earner to prove that lower amount of CS in C’s best interest, but may do this by utilizing supported parents’ Income and Expense Declaration

T/Ct was within its authority to consider historical payments by F as some evidence that C’s reasonable needs were being met

High Income Payor

S.P. (cont’d)

T/Ct statement of reasons provided a detailed explanation for its reasons for the CS award

T/Ct properly fulfilled its obligation to state the reasons why it deviated from guideline

Fam C 4056(a)(3)

McGinley v. Herman (1996) 50 Cal.App.4th 936

Rojas v. Mitchell (1996) 50 Cal.App.4th 1445

High Income Payor

S.P. (cont’d)

T/Ct properly recognized F’s wealth/status

T/Ct made specific findings M’s articulated proposed needs were

Purposely inflated

Factually unsupported

Unreasonable

Not credible

High Income Payor

In re Marriage of Usher(2016) 6 Cal.App.5th 347 (CA-2(4))

H was successful director and producer, earned $4.25M per year

At time of disso, H agreed to pay $17,500 child support

Stipulated judgment acknowledged

H was a high earner within the meaning of Fam C 4057(b)(3)

CS not guideline

Deviation was in C’s best interest, needs adequately met

Both parties had opportunity to analyze with accountants the expenses of their C

Waived right to seek modification of non-guideline CS order with showing of material COC

Marriage of Usher (cont’d)

3-2015: H filed RFO – T/Ct reduces CS to $9,842 based upon material COC based upon decline to H’s income

Two experts

W – assets over $67M, assets could generate 4.5% (actual return 2.46%)

H – 4.5% rate of return escessive, assumed rate should be 1%

T/Ct found “material COC” warranting reduction CS despite H’s substantial wealth and assets totaling over $67M

Marriage of Usher (cont’d)

T/Ct found material COC warranting modification of CS despite “substantial wealth” and assets over $67M

Court performed own calculation and imputed 1% rate of return on bulk of assets

W appeals, H’s reduced income did not constitute a material COC in light of extreme wealth

Marriage of Usher (cont’d)

CA-2(4): REVERSES

Substantial evidence did not support finding that H’s reduction in income constituted material change in ability to provide level of CS he had agreed was in the best interest of his son

Further, utilization of 1% rate of return on H’s non-real estate investments was unreasonably low

Miscellaneous Issues Related to CS Modification

Child Support Modification

Fam C 4064

The court may adjust the child support order as appropriate to accommodate seasonal or fluctuating income of either parent

In re Marriage of Hall (2000) 81 Cal.App.4th 313: The formula does not admit one parent’s income to be a fluctuating variable while the other parent’s income is assumed to be static

Fam C 4504: Crediting of SSA or RRA payments

If NCP receiving payments for SSA, RRA or VA

Payments received by the custodial parent or other child support obligee shall be credited toward the amount ordered by the court to be paid by the noncustodial parent for support of the child

Unless the payments made by the federal government were taken into consideration by the court in determining the amount of support to be paid

Credited per CCP 695.221 (ongoing then arrears)

In re Marriage of Daugherty(2014) 232 Cal.App.4th 463 (CA-1(4))

In calculating CS obligation of an obligor who received Social Security disability payments

Child’s derivative insurance benefit was properly credited toward obligor’s CS payments without being counted as part of obligor’s income

In determining the amount of support the obligor should pay [SSA 202,42 USC 402(d);Fam C 4504(b),Fam C 4058(a)]

In re Marriage of Hall and Frencher(2016) 247 Cal.App.4th 23 (CA-4(2))

H receives Social Security disability benefits

T/Ct denied his request to apply excess derivative benefits

Paid to W under 42 USC 402(d) for his C toward H’s CS arrears

H appeals

CA-4(2): REVERSES

Credits

Marriage of Hall and Frencher(cont’d)

Fam C 4504(b) provides any Social Security derivative benefits paid

Shall be credited toward the amount of CS ordered

The credits are made pursuant to CCP 695.221 which establishes priority for crediting the payments