CASE HIGHLIGHTS: IN RE MARRIAGE OF WEINSTEIN

In Re Marriage of Weinstein 4 Cal.App. 4th 555

FACTS:

MARRIED: 1965
SEPARATED: 1987
(21 year long term marriage)

CHILDREN: At the time of trial, their older son, Bradley, was 19 years old and lived with respondent, and their younger son, Kevin, was about to turn 18 and lived with appellant.

SUPPORTING SPOUSE/HUSBAND
NET INCOME:
1981 218,909
1982 274,153
1983 232,487
1984 286,626
1985 281,269
1986 317,870
(Separation Date/Divorce Filed: February 18, 1987

1987 353,076 (Estimated net after tax income made by wife's expert)
1988 427,308 (Estimated net after tax income made by wife's expert)

Husband estimated he worked close to a hundred hours a week as an obstetrician.
Supported spouse/wife worked as a secretary for the first three and a half years of the marriage, and did not work for compensation after that time. She was actively involved in volunteer work for Jewish and hospital-related organizations, spending as much as 30 hours a week on these activities. Wife had three herniated discs which caused her discomfort if she sat for too long.

LOWER COURT SPOUSAL SUPPORT ORDERS:
IN SUPPORT ORDERS, LOWER COURT PROPERLY DID NOT CONSIDER POST SEPARATION $146,039 INCREASE IN HUSBANDS ANNUAL INCOME
[1988: $427,308 - 317,080 = $146,039 ]

• The court's calculation and resulting order was based on AVERAGE of community income from 1981 through 1986.
• The court did NOT consider husband's 1988: net after tax income of $427,308.
• The lower court issued spousal support order of $8,500 per month, or 102,000 annually. (That is approx. 32% of husband's 1986 NET income. )

The trial court stated that spousal support of $8,500 per month was "consistent with the party's lifestyle during marriage." The statement of decision notes four factors that were specifically considered in setting the amount of support:

1. Wife could live well on a net (after tax) income of $5,500 and had done so on less between February 1987 and April 1988;
2. Husband had been and would be contributing heavily to the education of the parties' sons and would not expect wife to do so;
   
3. Wife's expense itemization included extravagant and nonexistent items; and
   
4. Wife had some minor income beyond spousal support.

------------------------
Wife appealed, claiming:

1. Trial court erred in failing to consider respondent's higher post-separation income in setting the amount of spousal support.
2. Trial court erred in defining the marital standard of living by reference to the parties' income during marriage rather than their actual expenditures and
   

• APPEALS COURT FOUND LOWER COURT ACTED PROPERLY IN NOT CONSIDERING POST SEPARATION INCREASE IN HUSBANDS INCOME IN SUPPORT ORDERS:

Where, as here, an award based on marital income level is sufficient to maintain the marital standard of living, there is no occasion to draw upon post-separation income. "It is ... (supported wife's)...needs which must be examined, not ... (husband's).... standard of living due to post-separation separate property earnings." (In re Marriage of Smith (1990) 225 Cal.App.3d 469 at p. 487)(Text added)

See also: In re Marriage of Hoffmeister (1987) 191 Cal.App.3d 351:

Hoffmeister involved a wife's request for modification of spousal support five months after entry of an interlocutory judgment on the grounds that the husband's income had increased and her needs, measured by the marital standard of living, remained unmet. The court held that when a request for modification of support is based on an increased ability to pay, the supported spouse must also show that his or her needs at the time of separation were not met. (Hoffmeister, 191 Cal.App.3d at p. 364.)

APPEALS COURT FURTHER FOUND:

• FOR COMPUTING SPOUSAL SUPPORT, STANDARD OF LIVING SHOULD NOT BE BASED ON UNREASONABLE WORK HOURS BY SUPPORTING SPOUSE DURING MARRIAGE
• FOR COMPUTING SPOUSAL SUPPORT, STANDARD OF LIVING SHOULD NOT BE BASED ON OR ON MARITAL LIVING STANDARD THAT WAS BEYOND COMMUNITY'S MEAN

Citing In re Marriage of Smith (1990) 225 Cal.App.3d 469, the Weinstein court stated:

"While [Smith ] ... noted that "the reference point is usually the actual marital standard of living, that is, actual expenditures during the marriage" (id., at p. 484), Smith cautioned that standard of living is neither a "floor" nor a "ceiling" for spousal support but "merely a 'basis' or reference point for determining need and support." (Ibid.) In that case, because the husband had worked unreasonable hours during the marriage and the couple had lived beyond their means, the court found the actual marital standard of living had "reduced significance as a point of reference in determining [the supported spouse's] reasonable needs and support" and was eclipsed by "what would have been a reasonable standard of living." (Id., at pp. 485-486.)"
In Re Marriage of Weinstein 4 Cal.App. 4th 555 at p. 566. [Emphasis added]

CASE HIGHLIGHTS: In Re Smith & Ostler

In re Marriage of Smith & Ostler (1990) 223 Cal.App.3d 33
How Should Bonuses be Handled?

FACTS:

• 40 % increase in husbands salary and bonuses during the last three years of marriage
  
• Long term marriage (21 years)
• 2 minor children, 9 and 14
  
• Husband received an annual bonus
  

HUSBANDS SALARY & BONUS INCOME:

1985
Fixed annual salary: $140,004
Bonus (attributable to 1984 services) 75,000
TOTAL 1985 INCOME: $215,000 ($17,917 per month)

Request for Dissolution filed: March, 1986
1988
Fixed annual salary: $165,000
Bonus (attributable to 1987 services) 135,000
TOTAL INCOME: $300,000 ($25,000 per month)

Bank stock and stock options
which generate dividends: $18,50000 per year
Annual car allowance: 11,280 and

Various other benefits such as partially subsidized health insurance, life insurance, pension contributions, an expense account for business meals, and the availability of executive credit.

LOWER COURT SUPPORT ORDER (UPHELD):

• $5,859 per month + 25% of annual bonus for next 3 years. (15% of annual bonus toward spousal, 10% of annual total bonuses toward child support)
• Based on husband's stipulation, he was ordered to pay wife's school tuition, schoolbooks, and laboratory fees for the next three school years, with certain conditions about enrollment and reporting, and to maintain insurance on his life for the benefit of the children.

Furthermore, the court ordered:

• Three year "step down" in support orders to $1.
  

The court ordered an automatic step-down-all spousal support, both fixed and bonus percentage, was to be automatically reduced to $1 per year in three years-effective June 1, 1991, unless prior to that time, Vicki files a motion and shows good cause why the support order should be modified by demonstrating that she has made her best efforts to become self- supporting. Jurisdiction was reserved beyond June 1, 1991, to modify spousal support on a showing of changed circumstances. Smith & Ostler at p. 41

LOWER COURT REASONING: BONUSES are NOT a given

On the question of Clyde's future bonus income, the [lower] court stated, "No future bonus is guaranteed. It would therefore not be appropriate to base a support order on Husband's bonus income and then require him to file motions to modify at such times as the bonus is reduced. It would be more fair to all parties to base the support order on Husband's income from [223 Cal.App.3d 42] salary and dividends, and to allocate a portion of the future bonus income to the children and to Wife by way of a percentage interest so that future litigation will not be necessary as the bonus income changes."[text added] Smith & Ostler at p. 41-42

LOWER COURT STATED

"Vicki and the two minor children need $5,859 per month, excluding her education expense and including income taxes, to meet their reasonable needs. "The support award ... will enable Wife and the two minor children to enjoy substantially the same standard of living enjoyed by the family during the seven most recent years prior to the separation of the parties on January 1, 1986, which standard of living appears to have been supported on an average net income, including his annual bonus, of $6,000 per month, during a time when the family was comprised of six people ...." Smith & Ostler at p. 42

LOWER COURT FOUND:

• Husband's gross salary is $13,750 per month, plus dividend income of $1,542 per month.
• Husband has mandatory deductions of $4,606 per month
• HUSBAND'S NET MONTHLY INCOME, excluding bonuses, of $10,686 per month
• Wife had no income from earnings or assets
  
• Lower court found husband had the ability to pay $5,900 per month for support, combined spousal and child support.
  

CASE HIGHLIGHTS: In re Smith (1990)

In re Marriage of Smith (1990) 225 Cal.App.3d 469

LESSON OF SMITH:
To limit later modification when supporting spouse has an increase in income, in marital stipulation and order, include a finding that the amount of support is sufficient to meet needs of living comparable to reasonable living standard available to the parties while married.
(See Smith at p, 492)

QUESTION IN SMITH:
Can a supported spouse submit a request for upward modification of spousal support purely on the grounds of increased income and ability to pay of the supporting spouse?
COURTS ANSWER: NO.

FACTS:
The trial court found, and wife concedes:

1. Husband worked excessive hours during the marriage and
2. The parties established a standard of living that was beyond their means.

Based upon the supporting spouse's present financial earnings, as a matter of law, can a supported spouse move for an upward modification of spousal support to enable her to live at that precise standard of living established during the marriage, despite the fact the marital lifestyle was based on excessive work hours, and 'living beyond the couple's means?'

LOWER COURT ORDER:
Wife was awarded an upward modification of spousal support by trial court. The order almost doubled the monthly support from $1,700 original order to $3,300. (Wife had requested increase to $7,317.)

Husband appealed on grounds:
(1) There was no showing of a material change of circumstances since the prior order and (2) There was no showing that the prior order when made did not meet wife's needs consistent with the marital standard of living.
Wife appealed on grounds the lower court was mandated to increase spousal suport to $7,317 to enable her to live at the standard of living established during the marriage..

APPEALS COURT HOLDING:

In this case we hold that before a motion for upward modification of spousal support can be considered the moving party must prove that the prior order, when made, was insufficient to meet his or her reasonable needs as measured by the applicable guidelines set forth in Civil Code section 4801, subdivision (a), or that the reasonable cost of satisfying those needs has increased. If this is shown, the moving party must then prove the obligor's ability to pay increased spousal support. Smith at p. 469
... ... ...

Our analysis begins with the general rule that for a court to consider a motion for modification of spousal support there must first be a showing of a material change of circumstances since the last prior support order, taking into consideration both the needs of the supported spouse and the ability of the supporting spouse to meet those needs. (In re Marriage of Kuppinger, supra, 48 Cal.App.3d at p. 633.) A material change of circumstances may consist solely of an increase in the supporting spouse's ability to pay, but if that is the only change, then to obtain an increase in support there must also be a showing that the amount of support previously ordered had not been adequate to meet the supported spouse's reasonable needs at that time. (In re Marriage of Hopwood, supra, 214 Cal.App.3d at pp. 1607-1608; In re Marriage of Hoffmeister, supra, 191 Cal.App.3d at pp. 363-364.) Smith, p. 483

...(the wife's ) needs which must be examined and proven, not Bill's standard of living due to post-separation separate property earnings. (In re Marriage of Hoffmeister, supra, 191 Cal.App.3d 351.)
3. Conclusion.
....the parties' actual marital standard of living has reduced significance as a point of reference for determining Pat's reasonable needs and support, due to the fact that during the marriage Bill worked excessive hours and the parties lived beyond their means. A more appropriate measure of Pat's post-separation needs is what would have been a reasonable standard of living for the parties given what Bill would have earned had he worked at a reasonably human paceSmith, p. 493

SURVEY OF CASE HIGHLIGHTS

In re Martin (1991) 229 C.A. 3d 1196
Husband's buyout strategy fails:

• LONG TERM MARRIAGE (11 YEARS)
  
• HUSBAND FINANCED BUYOUT OF WIFES COMMUNITY PROPERTY
• HUSBAND CLAIMED HE COULD NOT AFFORD/SHOULD NOT BE ORDERED TO PAY SPOUSAL SUPPORT ON GROUNDS OF
  
• BUYOUT LOAN COSTS
• WIFE HAD ACCESS TO BUYOUT MONIES AS HER SEPARATE PROPERTY

Here, husband may not finance a "buy-out" of community property and then successfully claim inability to pay spousal support. By reason of well- settled principles, wife is entitled to one-half of the community property (see e.g., Civ. Code, § 4800, subd. (a)) or an equalizing payment therefor. Upon dissolution, the $209,500 received from husband became her separate property. While wife "... was not obligated to invest her separate assets in a certain manner ..." (In re Marriage of Kennedy (1987) 193 Cal.App.3d 1633, 1640 [239 Cal.Rptr. 151]; see also In re Marriage of Kuppinger (1975) 48 Cal.App.3d 628, 635 [120 Cal.Rptr. 654]), the trial court correctly factored this separate property estate into the spousal support equation. (See Civ. Code, § 4801, subd. (a)(5), In re Marriage of Kennedy, supra, 193 Cal.App.3d at pp. 1640-1641.)

____________________________________________________________________

CASE HIGHLIGHT: ACKERMAN

Ackerman (2006) 146 Cal.App. 4th 191

A spousal support award "must bear some relationship to the standard of living of the parties during their marriage and not the post-separation standard of living of the supporting spouse.

But equality of postseparation income is not an element of section 4320 in setting spousal support. (See § 4320.) At best, the marital standard of living entitled wife to financial support commensurate with her lifestyle before she and husband separated. Although the law protected her from a precipitous drop in her standard of living after her divorce, it did not guarantee her dollar-for-dollar equality between her postseparation income and husband's. (In re Marriage of Hoffmeister (1987) 191 Cal.App.3d 351, 363.
Ackerman at p. 210.

----------------------------------
CALCULATING AN ESTIMATE OF THE STANDARD OF LIVING THE COMMUNITY HAS GROWN ENTITLED TO:
AVERAGE INCOME OR EXPENSE?

Average income is particularly appropriate where, as here, there was evidence the parties lived beyond their means.

Although a court may properly consider both income and expenses in determining the martial standard of living (Cheriton, supra, 92 Cal.App.4th at p. 307, fn. 23), it may also base it on the family's average income, rather than expenses. (In re Marriage of Weinstein (1991) 4 Cal.App.4th 555, 566 (Weinstein).) Average income is particularly appropriate where, as here, there was evidence the parties lived beyond their means. (Ibid.) Moreover, the court considered her claimed expenses of $50,000 a month but found them unreasonable when compared to the $61,000 gross average a month husband made prior to separation and the $87,500 a month the parties stipulated that husband was making or was capable of making. The trial court was not required to accept wife's assertion of claimed expenses and acted within its broad discretion in determining what it deemed her actual needs and expenses. (Smith, supra, 225 Cal.App.3d at p. 487.)
Ackerman (2006) 146 Cal.App. 4th 191 at p. 207

CONTRIBUTIONS CALCULATED TOWARD GENERATING MONTHLY INCOME SUFFICIENT TO ENABLE CONTINUED LIVING STANDARD COMPARABLE TO THE STANDARD BEFORE SEPARATION:

• Child support
• Spousal support
• Reasonable interest from the assets awarded
• Monthly earned income imputed to supported spouse.

Ackerman at p. 210.

Ventura County Local Rules Regarding Spousal Support

How is Permanent Spousal Support Calculated?

VENTURA COUNTY LOCAL RULES

RULES APPLICABLE TO OSC'S AND MOTIONS REGARDING CHILD, SPOUSAL OR PARTNER SUPPORT OR ATTORNEYS' FEES AND COSTS

RULE 9.15 POLICIES AFFECTING SUPPORT COMPUTATIONS

A. INCOME-BASED COMPUTATIONS

Awards of child support and temporary spousal or partner support allocate the income of the parties in an effort to meet the needs of all parties, recognizing that, in most cases, there is not sufficient income to sustain either party at the same standard of living that existed prior to separation.

Neither the current statute governing child support nor the Santa Clara Support Schedule for temporary spousal or partner support address living expenses.

B. COMPUTATION OF CHILD SUPPORT

Computation of child support will be strictly in accordance with state law. All orders for child support shall specify the amount of support for each minor child in accordance with Family Code 4055(b)(7).

C. COMPUTATION OF TEMPORARY SPOUSAL SUPPORT

Ventura County has adopted the Santa Clara Support Schedule for the purposes of determining the amount of temporary spousal or partner support. The amount of temporary spousal or partner support determined under the Santa Clara Support Schedule is rebuttably presumed to be correct. In calculating the parties' incomes and various offsets for the purpose of applying the Santa Clara Support Schedule, the court will apply the principles set forth in the state child support law. (Revised effective 1/1/05)

SIDEBAR ISSUES

INCOME CAN ONLY BE IMPUTED TO A PARENT IF IT IS IN THE BEST INTERESTS OF THE CHILDREN.

But no authority permits a court to impute earning capacity to a parent unless doing so is in the best interest of the children. By explicit statutory direction, the court's determination of earning capacity must be "consistent with the best interest of the children." (§ 4058, subd. (b). And see, e.g., In re Marriage of LaBass & Munsee, supra, 56 Cal.App.4th at pp. 1339, 1340; In re Marriage of Hinman, supra, 55 Cal.App.4th at p. 1000; In re Marriage of Catalano, supra, 204 Cal.App.3d at p. 555.) Cheriton at

In this case, the trial court made no express or implied finding that imputing earning capacity to Iris would be in the children's best interest. We find it difficult to imagine how the children's interests are served by doing so, since the imputation of earning capacity to Iris effectively reduces overall monetary support for the children. fn. 19 But we need not speculate on that question here, since the determination is properly left to the trial court on remand.

SPOUSAL SUPPORT:
A SUPPORTING PATY'S ASSETS MAY BE CONSIDERED.

Under the statute, a key factor is the supporting party's "ability to pay," which encompasses assets as well as income. (§ 4320, subd. (c); In re Marriage of Epstein (1979) 24 Cal.3d 76, 91, fn. 14; In re Marriage of Dick (1993) 15 Cal.App.4th 144, 159.) Thus, it is "proper for the court to look to assets controlled by husband, other than income, as a basis for the award [of spousal support]." (In re Marriage of Dick, supra, 15 Cal.App.4th at p. 160.) However, as one commentator has noted, "it remains highly unusual for a court to use assets more than income as a basis for determining [spousal] support." (2 Kirkland et al., Cal. Family Law: Practice and Procedure, supra, Spousal Support Orders, § 51.33[4], p. 51-27.) Cheriton at

After weighing the statutory factors, "the trial court may fix spousal support at an amount greater than, equal to or less than what the supported spouse may require to maintain the marital standard of living, in order to achieve a just and reasonable result under the facts and circumstances of the case." (In re Marriage of Smith, supra, 225 Cal.App.3d at p. 475.)

Cherion at

X
X
X