Opinion
E032560.
7-14-2003
In re the Marriage of GARY and SALLY MATHEWSON. GARY MATHEWSON, Respondent, v. SALLY MATHEWSON, Appellant.
Donna Lee Sturgill Diaz, for Appellant. Law Offices of Adams, Clark & Clark, Carol L. Adams, Jennifer Clark and David Clark, for Respondent.
1. Introduction
Sally Mathewson (mother) appeals from the family courts orders modifying Gary Mathewsons (fathers) child support payments and ordering mother to reimburse husband for overpayment. On appeal, mother claims the trial court erred in calculating her income and fathers income. Mother also claims the court erred in denying her motion for reconsideration on grounds that it was untimely.
We conclude that the trial court did not abuse its discretion in calculating mothers gross monthly income based on the information available. The court, however, miscalculated fathers gross monthly income by $ 400. For this reason alone, we reverse the trial courts orders and remand the case for the court to recalculate the amount of child support and the amount of fathers reimbursement. We conclude that the trial court properly denied mothers motion for reconsideration. We reverse in part and affirm in part.
2. Factual and Procedural History
After mother and fathers divorce, the court ordered father to pay mother $ 1,387 in child support for their two children. Father remarried and adopted his new wifes three children. On February 14, 2002, father filed an order to show cause to modify the child support order on the grounds that he had adopted three children and that mother had failed to provide accurate information concerning her income.
During the hearing on fathers order to show cause on June 3, 2002, father presented mothers employment contract with the Riverside County Department of Social Services for shelter care services. Father also presented mothers home loan application with her accompanying bank statements for the past year.
Based on fathers arguments and mothers failure to provide accurate information concerning her income, the trial court estimated mothers income at $ 6,000 per month, about $ 5,000 more than the average monthly income reported on her income and expense declaration. Based on this amount, the court granted fathers request and reduced his monthly child support obligation from $ 1,387 to $ 294.
On June 24, 2002, mother filed a motion for reconsideration. In addition to responding to mothers motion, father filed a request for reimbursement for his past overpayment of child support and attorney fees. The court denied mothers motion on the grounds that it was untimely and that mother failed to present new evidence to support any modification. The court granted fathers motion for reimbursement in the amount of $ 6,378.96, but denied fathers request for attorney fees.
3. Income Documents
Mother claims the trial court erred in considering fathers evidence and argument during the June 3, 2002, hearing. Mother argues that, under California Rules of Court, rule 323, father was required to provide mother with notice of the evidence that would be presented during the hearing. Mothers argument lacks merit.
California Rules of Court, rule 323 provides in part: "Evidence received at a law and motion hearing must be by declaration, affidavit, or request for judicial notice without testimony or cross-examination, except as allowed in the courts discretion for good cause shown."
This provision does not apply. California Rules of Court, rule 301 states: "The rules of this division apply to proceedings in civil law and motion, as defined in rule 303(a), and to discovery proceedings in family law and probate." The cited reference further provides that "law and motion" includes any proceedings held on "application before trial for an order, except for causes arising under the Welfare and Institutions Code, the Probate Code, the Family Code . . . ." The current proceeding falls under the exception set forth in rule 303(a). Because fathers order to show cause was a general proceeding under the Family Code, and was not a discovery proceeding, the evidentiary requirement under rule 323 does not support mothers claim.
California Rules of Court, rule 303(a)(1).
Moreover, mother should have been fully aware of the contested issues at the June 3, 2002, hearing. In his order to show cause, father specifically stated that mother misrepresented her income and, despite her reported income, was planning to purchase a new home. Mother therefore should have anticipated that father would present evidence to show any discrepancy between her reported income and her actual income. Mother also should have expected father to discuss, and provide any available evidence to support, mothers purchase of her new home. Mother had knowledge of the documents, including her employment contract and her bank statements, and should have been prepared to respond to fathers arguments. During the hearing on mothers motion for reconsideration, fathers attorney noted that father had requested from mother all documents related to her income. At that time, mother supplied copies of her bank statements. Mothers suggestion that father surprised her with such evidence during a hearing held, in part, to determine her income is neither persuasive nor reasonable.
We conclude that the trial court did not abuse its discretion in considering fathers evidence.
4. Income
Calculations
Mother claims the trial court made several errors in calculating her and fathers income in modifying the child support order.
For purposes of determining child support, income is broadly defined. Under section Family Code 4058, gross income is "income from whatever source derived . . . ." These sources include salaries, wages, bonuses, rents, dividends, pensions, and interest. In setting a parents gross income, the court is not limited to that parents actual income. In fact, section 4058 specifically allows the court to attribute income to a parent despite the parents deliberate attempts to minimize her income. A trial court exercises broad discretion in ordering child support. The courts order will not be overturned absent an abuse of discretion.
In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 285.
All further statutory references will be to the Family Code unless otherwise stated.
See In re Marriage of Cheriton, supra, 92 Cal.App.4th at page 285.
Section 4058, subdivision (a)(1).
In re Marriage of Destein (2001) 91 Cal.App.4th 1385, 1391.
In re Marriage of Destein, supra, 91 Cal.App.4th at page 1392.
In re Marriage of Kerr (1999) 77 Cal.App.4th 87, 97.
In re Marriage of Cheriton, supra, 92 Cal.App.4th at page 282; see also In re Marriage of Hubner (2001) 94 Cal.App.4th 175, 184.
A. Mothers Business Income
Mother claims the trial court erred in calculating her actual income by failing to deduct her business expenses.
Section 4058 provides that gross income includes "income from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business." The statute requires that the court deduct any legitimate business expenses from the gross receipts to determine the amount of a parents gross income.
Mother is self-employed as a shelter care or foster care services provider for the County of Riverside. On her income and expense declaration, mother reported an average gross monthly income of $ 1,050.08. Consistent with this amount, mothers 2001 income tax return lists an annual business income of $ 12,601. As reported on her Schedule C form, mothers annual business income is the amount arrived at by deducting $ 19,978 in business expenses from $ 32,579 in gross receipts.
During the June 3, 2002, hearing, father presented documents related to mothers income, including her employment contract and her home loan application with accompanying bank statements. Mothers bank statements revealed approximately $ 78,859 in deposits. Mothers employment contract provided that the County paid mother the specialized care rate of $ 605 per child per month and a per diem rate per child, based on a pro rated monthly rate set forth in Welfare and Institutions Code section 11461. Depending on the childs age, the per diem rates varied from about $ 300 per child per month to over $ 400 per child per month. Mother provided care for about five children at a time. The contract also states that the county would pay in advance or reimburse mother for certain costs, including medical expenses, telephone calls, and clothing.
Based on this information, the court found that mothers income and expense declaration inaccurately reflected mothers actual income. The court repeatedly accused mother of lying and falsifying her income documents.
Mother claimed that some of her deposits were attributable to fathers child support payments. Mother also informed the court that some of her deposits were monies from the sale of her property or the transfer of her assets.
Even after hearing mothers claims, the court found that mother could not explain the discrepancy between her reported income and her monthly deposits. The court estimated that, based on mothers bank statements and her employment contract, mother received on a monthly basis $ 3,000 in taxable income and $ 3,000 in nontaxable income.
Substantial evidence in the record supports the courts finding that mother was not truthful concerning her gross monthly income. While mother reported only $ 1,050.08 in gross monthly income from her employment with the County, mother maintained about $ 3,548 in checking accounts, $ 16,726 in a savings accounts, and $ 10,000 in cash in a safe at home. While mother claimed to have accumulated these monies over the past six years, her claim is inconsistent with her reported income. As the court found, mother would not be able to save money after paying for her own personal expenses and paying for any additional expenses for the children under her care, based on her claim that the funds provided by the county were routinely insufficient.
See In re Marriage of Schulze (1997) 60 Cal.App.4th 519, 528 (applying substantial evidence test).
What was troubling to the lower court and to this court was mothers deceptive accounting practices. At one point, the court warned mother that her accounting practices would not survive an audit. Mother claimed that she paid for the foster childrens expenses from the per diem rate. Although not reflected on her income tax return, the cost of caring for the children would be deducted from the per diem rate. On her tax return, mother only reported the income received at the professional care rate. From the professional care rate, mother again deducted the expenses related to caring for the foster children placed in her care. Her tax return indicates $ 19,978 in deductions for business expenses, including rent, transportation expenses, utilities, clothing, diapers, toys, entertainment, telephone calls, on line services, and other expenses.
On mothers income and expense declaration, mother reports her gross monthly income of $ 1050.08 and the per diem rate for the children under her care. From this amount, mother deducts amounts for rent, transportation, utilities, food, entertainment, telephone calls, on line services, and other expenses.
Furthermore, the record shows that the county pays for certain expenses in advance, including the cost of telephone calls, and provides reimbursement for other expenses, such as the cost of clothing. As noted by father, mother reported $ 2,905 in deductions for clothing expenses on her income tax return. In her motion for reconsideration, mother admitted that she received from the county $ 2,464 in reimbursement for clothing. It goes without saying that mother is entitled to only one reimbursement or deduction for every one legitimate business related expense.
See Stewart v. Gomez (1996) 47 Cal.App.4th 1748, 1755-1756.
As the trial court suspected, mother may have inflated her expenses, double-counted her deductions, and minimized her actual income. Although it is unclear to what extent mother has falsified her income documents, mother has significantly underestimated her gross monthly income. While the courts calculations may not be entirely accurate, we cannot conclude that the court abused its discretion in considering mothers checking account deposits and her employment contract in estimating mothers income at $ 6,000 a month.
B. Child Support
Mother argues that the trial court erred in including fathers child support payment in her gross monthly income. Section 4058 specifically excludes child support payments from gross income.
Section 4058, subdivision (c).
The trial court found that mother deposited a total of $ 78,859 into her checking account in the year 2001. That amount is equivalent to $ 6,571 per month. Part of that amount is attributable to fathers child support payments. In 2001, father paid mother $ 9,222.91 in child support. In subtracting the child support from the total deposits leaves $ 69,636.09 for the year or $ 5,803 per month.
The record is unclear as to whether the trial court considered fathers child support payments in arriving at a total gross income of $ 6,000 per month. As stated in the section below, because the court could have arrived at this amount after considering fathers child support payments and mothers other sources of income, we conclude that mother has failed to demonstrate a clear abuse of discretion.
See In re Marriage of Hubner, supra, 94 Cal.App.4th at page 184.
C. Mothers Other Non-Income Sources
Mother claims that the trial court erred in including monies received from non-income sources, including her tax refunds, the sale of certain property, and transfers from other accounts, in calculating her gross monthly income.
At the June 3, 2002, hearing, the only comment mother made concerning these non-income sources was that she had sold certain vehicles and deposited the proceeds into her account. Mother did not specify the amount deposited as a result of these transactions. It is questionable whether this amount would have had a substantial effect on the courts decision. Although the court had copies of mothers bank statements, mother did not mention the other deposits from her tax refunds and the transfers from her other accounts. We cannot conclude that the trial court abused its discretion for failing to take into consideration information that was not pointed out to the court at the time that it made its ruling.
At the hearing, however, the court addressed mothers claim that it could not include her cash deposits as income. Mother had incrementally deposited her cash from her home safe into her banking account.
While there is a distinction between income and other non-income producing assets, the record indicates that mother set aside the cash over time from her employment income as a foster care services provider. While mother asserted that the money was not earned in the past year, the court rejected mothers assertion. Because mother failed to provide an adequate explanation for the funds and because mother was depositing these funds into her checking account and claiming them as income for purposes of purchasing her new home, the court found that these deposits could be included in estimating mothers gross income. The court warned mothers attorney that her "client gets to have it one way or the other. It either is income that I can use here, or its not. And if its not, then its not income she can use to seek a loan."
While it is not entirely clear whether these deposits were included in, or in addition to, the $ 78,859 in total deposits, we conclude that the trial court did not abuse its discretion in finding that mother had access to additional sources of income. This additional source of income provided a reasonable explanation for the courts determination of mothers gross income.
See In re Marriage of Dacumos (1999) 76 Cal.App.4th 150, 154-155 (holding that earning capacity includes income from income-producing assets).
D. Fathers Income
Mother argues and father agrees that the court erred in calculating fathers gross monthly income. The court calculated fathers gross income to be $ 5,000 per month. A correct calculation of fathers income, by multiplying fathers weekly rate by 52 weeks and then dividing by 12, would result in a gross monthly income of $ 5,400.
Father argues that a difference of $ 400 is harmless under the circumstances. We disagree.
While mothers dishonest accounting practices presented challenges for the trial court in determining her gross income, the Legislature established and intended a precise method of calculating child support that requires the court to use exact figures, not close estimations. "A rigid algebraic formula has been combined with the sua sponte obligation of the trial court to state on the record reasons whenever the actual support order differs from the guideline amount. . . . [P] We may begin with the proposition that no trial judge making a child support order can escape making a formula calculation pursuant to section 4055. The calculation is itself a tedious job, because it requires accurate assessments of each parents taxable income [citations], and the time in which the higher earner of the two parents has primary physical responsibility for the children compared to the other parent [citation]. The task is like doing someone elses tax returns. [Citations.] No wonder one trial judge, for whom this court expressed great sympathy, was reluctant, when one variable in the equation was off by a mere 8 percent, to "rerun these dang things." [Citation.] [P] Yet the child support statutes permit no alternative." Although $ 400 may not appear to be a significant amount, the Legislature requires that the court redo the calculations. Moreover, any amount, no matter how small, given to support the children affected by the child support order would advance the states interest in ensuring that children receive adequate support.
Section 4055; see In re Marriage of Laudeman (2001) 92 Cal.App.4th 1009, 1013.
In re Marriage of Hall (2000) 81 Cal.App.4th 313, 316-317.
In re Marriage of Whealon (1997) 53 Cal.App.4th 132, 145.
In re Marriage of Cheriton, supra, 92 Cal.App.4th at page 283.
We therefore conclude that remand is necessary for the trial court to recalculate the guideline amount under section 4055 with fathers correct gross income of $ 5,400 per month. The court must also recalculate the amount of fathers reimbursement for his past overpayment of child support.
5. Motion for Reconsideration
Mother claims the trial court erred in denying her motion for reconsideration on the grounds that it was untimely.
Code of Civil Procedure section 1008 provides, in part: "When an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted, or granted conditionally, or on terms, any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order." Under this provision, the 10-day limitation begins to accrue when the applicant receives service of the written notice of entry of the order.
Code of Civil Procedure section 1008, subdivision (a); see also Wilson v. Science Applications Internat. Corp. (1997) 52 Cal.App.4th 1025, 1032, footnote 3.
The court held the hearing on fathers order to show cause on June 3, 2002. Mother filed her motion for reconsideration on June 24, 2002. The record does not contain a copy of a notice of entry of judgment. Thus, as mother stated during the hearing on her motion for reconsideration, she may not have received proper notice of the judgment.
Nevertheless, the trial court also considered mothers motion and decided the case on its merits. The court denied mothers motion because she had failed to offer any newly discovered evidence. The court admonished: "If you had put in all of this paperwork prior to June 3rd, and all of this was available to you then, if you had bothered to do your homework, it may have changed the result."
"Under Code of Civil Procedure section 1008, a party seeking reconsideration of a prior ruling upon an alleged different set of facts must provide both newly discovered evidence and an explanation for the failure to have produced such evidence earlier. [Citation.] [Citation.]" A trial courts denial of a motion for reconsideration is reviewed for an abuse of discretion. Mother contends the court abused its discretion in failing to consider her evidence. Relying on the case Film Packages, Inc. v. Brandywine Film Productions, Ltd. (Film Packages), mother suggests that she was attempting to present "a fuller statement of facts previously furnished." Film Packages, however, specifically distinguished between a request for reconsideration of a final order under Code of Civil Procedure section 1008, subdivision (a) and a request for reconsideration of a pending matter under subdivision (b). "While it may be error to reconsider a previous final order under section 1008, subdivision (a), where there is no showing of newly discovered evidence [citation], apart from that subdivision a trial court, in a still pending action, is generally vested with discretion to grant a renewed motion based on a fuller statement of facts previously furnished. [Citation.]" This case does not fall under subdivision (b). Moreover, another court observed: "This does not mean, however, that all facts not previously presented to a court now suffice; nor does it mean the Legislature has dispensed with the court-declared need to show a satisfactory explanation for failing to provide the evidence earlier, which can only be described as a strict requirement of diligence. [Citation.]"
In re Marriage of Drake (1997) 53 Cal.App.4th 1139, 1168.
Glade v. Glade (1995) 38 Cal.App.4th 1441, 1457.
Film Packages, Inc. v. Brandywine Film Productions, Ltd. (1987) 193 Cal. App. 3d 824, 238 Cal. Rptr. 623.
Film Packages, Inc. v. Brandywine Film Productions, Ltd., supra, 193 Cal. App. 3d at page 830.
Film Packages, Inc. v. Brandywine Film Productions, Ltd., supra, 193 Cal. App. 3d at page 830.
Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 690.
In this case, mother failed to satisfy this requirement of diligence. All of the evidence offered at the hearing on mothers motion for reconsideration was available before the June 3, 2002, hearing. While mother disagreed with fathers interpretation of her income documents, including her employment contract, this evidence was presented or available at the time of the previous hearing. Also, while mother offered a written declaration and the testimony of the social services coordinator, the court found that mother should have prepared this evidence for the June 3, 2002, hearing. It was mothers fault for not producing this evidence earlier.
See In re Marriage of Okum (1987) 195 Cal. App. 3d 176, 185, 240 Cal. Rptr. 458.
As stated previously, in his application for an order to show cause, father specifically challenged the truthfulness of mothers representations concerning her income. Before the hearing, fathers attorney requested that mother provide all documents related to her income. While mother withheld certain documents from father, she now seeks to present them to the court. All of these documents were in her possession or all of the information was within her knowledge before the June 3, 2002, hearing.
Mother therefore failed to satisfy both requirements that the evidence be newly discovered and that mother provide an explanation for failing to produce the evidence during the earlier hearing.
In re Marriage of Drake, supra, 53 Cal.App.4th at page 1168.
We conclude that the trial court did not abuse its discretion in denying mothers motion after considering the merits of her case. In arriving at this conclusion, we recognize that the trial court did not have full and accurate information concerning mothers income-primarily as a result of mothers own deliberate attempt to minimize her actual income-and therefore was required to make an order that may not have reflected the parties respective incomes precisely; however, we must uphold the courts earlier order unless mother has satisfied the requirements of Civil Code section 1008. Mother has not. We therefore affirm the courts August 15, 2002, order denying mothers motion for reconsideration.
6. Disposition
We reverse the trial courts June 3, 2002, orders on the sole ground that it incorrectly calculated fathers gross monthly income. We remand the case for the limited purpose of recalculating the guideline amount with fathers correct gross monthly income. For the same reason, the court also must recalculate the amount of fathers reimbursement for his past overpayment. After performing these calculations, the court must enter the appropriate orders. We affirm the trial courts order denying mothers motion for reconsideration. Both parties shall bear their own costs on appeal.
We concur: Hollenhorst, Acting P. J., and Ward, J.