Opinion
A116478
10-30-2008
In re the Marriage of STEVEN C. and HILARY A. ACCATINO. HILARY A. RENFER, Respondent, v. STEVEN C. ACCATINO, Appellant.
Not to be Published
In early 2003, Steven C. Accatino (Father) assumed primary physical custody of his two minor children and obtained an order reducing his child support obligation to "zero." Over two years later, he moved to modify child support and "set arrearages" of more than $127,000 against the childrens mother, Hilary A. Renfer (Mother). The trial court awarded only $4,158 in support and subsequently denied Fathers motion for reconsideration or to set aside its initial ruling. We conclude that the trial courts income determination and its award of limited retroactive support were within its discretion, and, accordingly, affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The parties separated in July 2000, after 27 years of marriage. In 2001, Mother inherited more than $1.5 million. She filed a petition for dissolution of marriage in July 2001, which resulted in a judgment terminating the marriage on February 20, 2002. Pursuant to a marital settlement agreement providing for joint physical and legal custody of the parties two minor children, Peter and Emily, the trial court ordered Father to pay monthly child support.
In February 2003, as provided in a mediated custody agreement, the trial court awarded primary physical custody of both minor children to Father pending a child custody evaluation. The trial court set child support at "zero, subject to retroactivity to 1/28/03." The custody evaluation was never conducted, and both children continued to reside with Father until June 2004, at which time Peter graduated from high school and moved in with Mother.
On June 17, 2005, Father filed a motion for modification of child support, seeking arrearages since January 28, 2003, and future support for Emily. He attached the February 2003 minute order and an income and expense declaration.
A few months later, in September 2005, Mother moved to modify the parties custody and visitation rights regarding Emily. At that time, Mother filed an income and expense declaration showing a total of $1,048 in monthly investment income ($505 in taxable dividends/interest and $543 in tax-exempt interest). Mother sent this declaration to Father with her 2004 tax return attached, but, in accordance with a local rule, did not file the tax return with the trial court. (See Super. Ct. Contra Costa County, Local Rules, former rule 12.6(b) [when a child support motion is pending, each party must furnish tax returns to the other party "in addition to the Income and Expense Declaration," but tax returns "should ordinarily not be filed with, or attached to, court pleadings . . ."].)
In December 2005, Mother filed a responsive declaration to Fathers child support motion, noting that she had been out of work since June 2003 but that the bed and breakfast she and her new husband owned had produced income of $11,051 in 2004. In her December 2005 declaration, she reported average monthly income of $1,200 from self-employment and $2,833 from investments ($2,000 in dividends/interest and $833 in tax-exempt interest).
At a March 17, 2006 case management conference, the trial court declined to allow the parties an evidentiary hearing, opting to decide the motions on the parties written declarations alone. The trial court set the motions for a one-hour nonevidentiary hearing on June 9, 2006.
Father filed another declaration in support of his motion on June 6, 2006, asserting: (1) he had been the primary custodial parent for Emily since March 2003, and for Peter from March 2003 to June 2004; (2) he had shouldered 100 percent of this financial burden because Mother had not paid any child support; (3) his gross income was $7,445 per month; (4) Mother had a trust account with a balance in excess of $1.47 million as of January 31, 2006; and (5) Mother had earned $24,091.66 on this account during the month of January 2006. Father additionally noted Mothers "personal spending" that month. Father attached the January 2006 trust account statement and asked the trial court to "use the $24,091.66 as [Mothers] monthly earning figure." He also provided DissoMaster printouts calculating guideline support based on income that included Mothers January 2006 trust earnings, self-employment income, and the tax-exempt interest reported in her September 2005 declaration. On this basis, he sought $4,245 a month for the 15 months he had primary physical custody of both children ($63,675), $2,653 a month for the 24 months he had primary physical custody of Emily only ($ 63,672), and $2,653 a month as Emilys future support.
On June 9, 2006, the trial court heard the custody and child support motions. Pursuant to the parties stipulation, the trial court adopted the custody and visitation recommendations of Emilys court-appointed counsel, which included a change of her primary physical custody to Mother. Turning then to the child support issue, Fathers attorney (James Fishel) briefly mentioned the financial burden caused by Mothers failure to pay child support, then stated, "We filed a declaration June 6th detailing why child support arrears are due and owing. And we would submit on a Reifler basis on that [Reifler v. Superior Court (1974) 39 Cal.App.3d 479, 483 (Reifler )]." After opposing argument from Mothers attorney (Dan Ryan), the trial court asked counsel for the parties, "So is it submitted Mr. Fishel, Mr. Ryan?" Both responded, "Yes." The trial court nonetheless permitted rebuttal argument by Fishel, who urged the trial court to treat the growth of the trust as income, or in the alternative, to impute income based on a reasonable rate of return on Mothers assets. After the trial court had taken the child support matter under submission, Fishel tried to draw attention to Mothers personal spending, but the trial court refused further discussion, reminding Fishel that he had submitted.
On June 19, 2006, the trial court issued a memorandum of decision in which it awarded a total of $4,158.30 in child support from January 1, 2006 through June 17, 2006. Distinguishing gifts and inheritances from the interest and dividends actually earned, the trial court calculated support based on income that included the interest and dividends reported in Mothers December 2005 income declaration. Additionally, the trial court noted that although Father had "ample time" to obtain supporting evidence, he had failed to present sufficient credible evidence on which to base arrears, including how much trust income Mother had received and how long she had received it, issues requiring the expert testimony of a forensic accountant. The trial court denied all other requests by the parties relating to child support.
On July 5, 2006, Father filed a motion seeking reconsideration of the trial courts June 19 decision under Code of Civil Procedure section 1008 or, in the alternative, relief from the mistake or excusable neglect of his attorney under Code of Civil Procedure section 473, subdivision (b). Father emphasized inconsistencies he had discovered between Mothers September 2005 declaration and her 2004 income tax return, which were not before the trial court at the child support hearing. Based on a monthly breakdown of income set out in the tax return ($ 1,179 tax-exempt interest, $1,770 qualified dividends and $2,398 ordinary dividends), Father sought child support of $1,109 a month from January 2004 through May 2006.
Fathers attorney explained in his affidavit that he had not provided the 2004 tax return in the first instance because he believed Mother had filed it with the court as an attachment to her September 2005 income declaration. He attached the following exhibits to his affidavit: the September 2005 income declaration Mother served on him by facsimile with her 2004 tax return, Mothers discovery responses, including her 2003 and 2004 tax returns, a DissoMaster printout based on the tax return income, and a copy of In re Marriage of de Guigne (2002) 97 Cal.App.4th 1353 (de Guigne), a case purportedly holding that a parent may be required to pay child support based on substantial assets instead of income.
Mother opposed reconsideration and relief, asserting that Father had failed to identify new evidence or show that her 2004 tax return was not available at the earlier hearing. As this evidence was provided in discovery, she argued, it was Fathers duty as the moving party to present it to the trial court. Mother also noted that Father had not raised de Guigne, supra, 97 Cal.App.4th 1353 in his papers or at the child support hearing.
At the hearing on the motion, Father again emphasized the 2004 tax return, claiming Mother had deliberately misled the trial court regarding her income. The trial court focused instead on the procedural showing reconsideration requires, concluding that Father had not met his obligation as the moving party to show why he could not with reasonable diligence have discovered and produced the allegedly new evidence in the first instance. The trial court pointed out that Fathers counsel (Fishel) had not mentioned the tax return at the hearing. Fishel responded that the trial court, in fact, had considered the income declaration to which he had believed in good faith the tax return was attached and that "the Court never pointed out to me that the Court didnt [have the tax return in front of it] . . . ."
In its Findings and Order After Hearing on October 13, 2006, the trial court denied the motion for reconsideration, concluding that Father had not met the requirements of Code of Civil Procedure section 1008, as he had not shown new or different facts, circumstances, or law. The trial court further concluded that relief from this type of order was not available under Code of Civil Procedure section 473, and in any event, Father had not "satisfied the Courts obligation with regard to the mistake." The trial court ordered Father to pay $1,500 in attorney fees as sanctions. (See Code Civ. Proc., § 1008, subd. (d).)
Father timely appealed from this order and the underlying order modifying child support and requested sanctions against Mother.
DISCUSSION
A. The Trial Courts Child Support Order.
Father asserts that the trial court erred in failing to include all of Mothers income in its child support calculation and in not awarding support back to January 2003. Courts have great latitude in applying the principles of the statewide uniform child support guidelines. (In re Marriage of Williams (2007) 150 Cal.App.4th 1221, 1240 (Williams).) The determination of whether particular facts warrant modification of support is within the trial courts discretion, and, absent abuse of this discretion, we will uphold the trial courts order. (See id. at pp. 1233-1234.) We review questions of law de novo, including the trial courts interpretation of the definition of "income" for purposes of child support. (In re Marriage of Pearlstein (2006) 137 Cal.App.4th 1361, 1371-1372 (Pearlstein).)
Courts adhere to the guideline formula on a request for modification of an existing order. (In re Marriage of Laudeman (2001) 92 Cal.App.4th 1009, 1013.) This amount is presumptively correct, but may be rebutted in special circumstances by admissible evidence showing that strict adherence to the formula would be unjust or inappropriate. (See Fam. Code, § 4057.) A partys child support obligation turns primarily on actual income and earning capacity. (Williams, supra, 150 Cal.App.4th at pp. 1237-1238.) Courts consider a partys assets only to the extent that they affect earning capacity or constitute a "special circumstance" justifying a departure from the guideline amount. (Ibid.; In re Marriage of Loh (2001) 93 Cal.App.4th 325, 332 [basing a child support order on assets first requires calculation of the guideline amount, which the trial court may then adjust for special circumstances].)
Fathers motion, evidence, and argument demonstrate that he asked for a modification of an existing child support order under the guidelines, seeking to treat the increase in the value of Mothers trust account in January 2006 as her monthly income or, alternatively, to impute income to her based upon a reasonable rate of return on her trust assets. Father did not assert that Mothers inherited assets constituted a special circumstance rendering the guideline amount "unjust or inappropriate." Rather, he focused exclusively on the guidelines income component.
Father also failed to advance below any of the remaining arguments in his opening brief. We limit our analysis to the issues and evidence presented to the trial court.
Accordingly, as the trial court correctly concluded, Mothers trust assets factored into her child support obligation only to the extent they produced interest and dividends. One-time gifts or inheritances are not income, but interest and dividends actually earned on these amounts constitute income for purposes of child support. (County of Kern v. Castle (1999) 75 Cal.App.4th 1442, 1453.) Moreover, the principal value of an investment and the earnings thereon do not constitute income to the extent they include unrealized gain. (Pearlstein, supra, 137 Cal.App.4th at pp. 1373-1374 & fn. 10, 1375 [excluding from income (1) the market value of stock on which gain has not yet been realized and (2) the proceeds of assets sold for purposes of reinvesting in income-producing assets]; see In re Marriage of Henry (2005) 126 Cal.App.4th 111, 119 ["Every type of income . . . is money actually received by the support-paying parent, not merely the appreciation in value of their assets. . . . If the Legislature had intended that the unrealized increase in the value of an asset should be considered income, it would have said so"].)
Father relies on a statement in Mejia v. Reed (2003) 31 Cal.4th 657, 671 (Mejia) that "[i]n assessing earning capacity, a trial court may take into account the earnings from invested assets." The case Mejia cited in support of this statement, In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 292, does not permit a trial court to impute unrealized gain as income for child support purposes. (See Pearlstein, supra, 137 Cal.App.4th at pp. 1373-74 & fn. 10.)
The trial court also acted within its discretion not to impute income based on a reasonable rate of return. Fathers request in this regard seeks, in essence, to base child support on Mothers earning capacity instead of her income. (See Fam. Code, § 4058, subd. (b); In re Marriage of Destein (2001) 91 Cal.App.4th 1385, 1391, 1392-1393 (Destein) [imputing income to husbands non-income-producing real estate holdings for purposes of child support].) Father is correct that the trial court may impute income on investment assets when "a parent has . . . the ability and opportunity to earn income" (id. at p. 1392) so long as it would be "consistent with the best interests of the children" to do so. (See Fam. Code, § 4058, subd. (b); Moss v. Superior Court (1998) 17 Cal.4th 396, 424.)
In this case, however, Father did not provide evidence of the needs or best interests of the children, relying instead on a single account statement, without offering any expert testimony to show the trust could have produced greater income. (Compare Destein, supra, 91 Cal.App.4th at pp. 1396-1397 [imputing income based on the husbands real estate holdings, considering factors such as the non-income-producing history of the assets, how long the husband had owned the assets, the market for real estate, and the disparity in the childrens lifestyles at the home of each parent].) Under these circumstances, Father cannot establish that the trial court abused its discretion in declining to impute income to Mother.
Finally, we find no error in the period of arrearages awarded by the trial court. We note at the outset that the trial court had authority to make its modification order retroactive to the date Father filed his motion, June 17, 2005, but no earlier. (See Fam. Code, § 3653, subd. (a); In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 300 (Cheriton).) Moreover, while the trial court had discretion to modify support from June 17, 2005 (In re Marriage of Leonard (2004) 119 Cal.App.4th 546, 555 (Leonard)), Family Code section 3653 did not require it to do so. Absent compelling circumstances, no abuse of discretion lies in ordering retroactive modification to a later date or refusing it altogether. (See Fam. Code, § 3653, subd. (a) ["An order modifying . . . a support order may be made retroactive to the date of the filing of the notice of motion or order to show cause to modify . . ., or to any subsequent date . . ."].) Here, the trial court ordered modification of child support retroactive to January 1, 2006, and Father presented no evidence compelling modification as of an earlier date.
We note that retroactive support requires evidence of the childrens needs during the period of retroactivity, which Father failed to provide. (See Cheriton, supra, 92 Cal.App.4th at p. 300; Leonard, supra, 119 Cal.App.4th at p. 560.)
B. The Trial Courts Denial of an Evidentiary Hearing.
Father was not entitled to present live testimony in support of his motion to modify child support. Code of Civil Procedure section 2009 affords trial courts discretion to decline oral testimony and determine motions on written declarations alone. (Reifler, >supra, 39 Cal.App.3d at p. 483.) This summary procedure is available to the trial court even when it must resolve contested evidentiary matters in deciding a motion. (See id. at p. 484 [distinguishing the use of affidavits in postjudgment motions from their exclusion as proof of "a fact necessary to a judgment"].) Thus, contrary to Fathers assertion, an evidentiary hearing is not required to resolve all factual disputes "relating to the financial circumstances of the obligor or other aspects of the support order . . . ." Indeed, trial courts should hold an evidentiary hearing in such matters only "if necessary." (In re Marriage of Brown & Yana (2006) 37 Cal.4th 947, 962 (Brown & Yana) [custody modification].)
Father cites a case from the Sixth Appellate District, Cheriton, supra, 92 Cal.App.4th at p. 298, for this proposition. We decline to follow that case or the authority it cites, In re Marriage of Hall (2000) 81 Cal.App.4th 313, 320, fn. 7 (Fourth Appellate District). As Division Five of this court has recognized, "Family law calendars . . . are so large that the system would collapse if every [child support motion] required a full-scale evidentiary hearing." (See County of Alameda v. Moore (1995) 33 Cal.App.4th 1422, 1427, overruled in part by Elkins v. Superior Court (2007) 41 Cal.4th 1337, 1361, & fn. 15 (Elkins) [as it relates to trials in domestic matters].)
Father has not shown such a need in this case. An evidentiary hearing "serves no legitimate purpose or function where the [moving party] is unable to make a prima facie showing . . . or has failed to identify a material but contested factual issue that should be resolved through the taking of oral testimony." (Brown & Yana, supra, 37 Cal.4th at p. 962.) In these circumstances, the trial court has no need for further assessment. (Id. at pp. 964-965.) This is particularly true in cases like this one, in which "the custody issue already had been fully litigated and the resulting judgment therefore was entitled to substantial deference [absent] a significant change of circumstances." (Elkins, supra, 41 Cal.4th at p. 1361; see Brown & Yana, supra, at pp. 955-956, 959-960.) Father did not raise below, and has not shown on appeal, any material factual dispute that turned on credibility. Indeed, we note that although the trial court alludes to a request for an evidentiary hearing, neither the request nor the basis on which it was made appear in the record.
We reject Fathers contention that the trial court failed to exercise its discretion in this regard, acting instead on a blanket court policy excluding oral testimony in all family law matters. The Superior Court of Contra Costa County, Local Rules, former rule 12.5(b)(3) (the local rule), on which he bases this argument, does not limit evidence to written declarations in every case; it implicitly recognizes the discretion of the trial court and sets out guidelines for the exercise of such discretion. Moreover, the record does not show that the trial court applied the rule mechanically, believing it precluded oral testimony.
We discuss the 2006 version of the local rule: "Subject to legal objection, amendment, and cross-examination, all declarations shall be considered received in evidence at the hearing. Direct examination on factual matters shall not be permitted except in unusual circumstances or for proper rebuttal. The Court may decide contested issues on the basis of the pleadings submitted by the parties without live testimony." (Super. Ct. Contra Costa County, Local Rules, former rule 12.5(b)(3).)
Father also challenges the local rule itself, contending that it conflicts with California law and violates the due process and equal protection clauses of the state and federal Constitutions. Father waived these issues by failing to present them below. (See Hepner v. Franchise Tax Bd. (1997) 52 Cal.App.4th 1475, 1486.)
Father claims, in any case, that the trial court failed to follow the "preferable procedure" in domestic relations matters, by reviewing the papers, allowing oral argument and offers of proof, and making inquiries to obtain necessary information. (See In re Marriage of Stevenot (1984) 154 Cal.App.3d 1051, 1059, fn. 3.) Father complains that the trial court here "insisted the matter be submitted" in short order and failed to ask questions on issues that lacked sufficient evidence to permit a ruling. This does not fairly characterize events at the hearing. The record shows that although the trial court allowed up to an hour of argument, Fathers counsel quickly submitted and did so again shortly thereafter and that, even so, the trial court allowed rebuttal before taking the matter under submission, only then refusing further argument. Father made no offer of proof and does not identify the questions he contends the trial court should have asked. The sole focus of his motion was income, imputed from Mothers assets or in the form of investment earnings; he did not mention other sources of income or assert Mothers assets as a special circumstance. Father may not reasonably expect inquiry into areas he did not put at issue with argument or evidence.
C. The Trial Courts Order Denying Reconsideration and Other Relief.
We review this order for abuse of discretion (see New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212 (New York Times)) and conclude that the trial court properly denied reconsideration, as Father did not meet the requirements of Code of Civil Procedure section 1008. Indeed, what Father truly was seeking was not reconsideration, but another bite at the apple—an after-the-fact recalculation of child support based on evidence he failed to present in the first instance. A motion for reconsideration must be based on new or different facts, circumstances, or law. (New York Times, at p. 212; see Code Civ. Proc., § 1008, subd. (a).) Facts of which the party seeking reconsideration was aware at the time of the original ruling are not "new or different." (Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 690.) Additionally, "the information must be such that the moving party could not, with reasonable diligence, have discovered or produced it at the [earlier hearing]." (New York Times, at p. 213.) To obtain reconsideration, a party therefore must provide, not only new evidence, but a satisfactory explanation for failing to offer the evidence in the first instance. (Ibid.)
The opening brief includes a discussion of the trial courts inherent power to reconsider its prior rulings. As the trial court did not exercise its authority in this regard, we address the reconsideration issue under Code of Civil Procedure section 1008 only.
Although Father did not seek support in his earlier motion based on Mothers 2004 tax return, this does not constitute new evidence for purposes of reconsideration. A party may not obtain reconsideration with evidence that "could and should have been, but was not, presented to the court in connection with the original motion." (In re Marriage of Barthold (2008) 158 Cal.App.4th 1301, 1314.) Father acknowledges that he had possession of the tax return over eight months before the child support hearing. He makes much of the fact that he assumed Mother had attached it to the September 2005 declaration she filed with the trial court because she furnished it along with the copy of the declaration she served on him. This assumption is unreasonable. As noted above, a local rule of court specifically required that the tax return be furnished to Father, but prohibited Mother from attaching it to court pleadings. (See Super. Ct. Contra Costa County, Local Rules, former rule 12.6(b).) In any event, this explanation does not account for Fathers failure to raise the alleged income discrepancies at the time of the support hearing or to include the tax return income in his original DissoMaster calculations. As the moving party, Father had the burden to produce evidence warranting the modification he sought. (See Williams, supra, 150 Cal.App.4th at p. 1234; Leonard, supra, 119 Cal.App.4th at p. 556.) We note further that Father provided no explanation for his failure to bring relevant case law to the trial courts attention in the first instance.
Fathers original DissoMaster printouts reflect Mothers monthly income as: $24,091 (unrealized gains on the trust account), self-employment income of $1,300 (roughly that reported in her December 2005 declaration), and $543 (tax-exempt interest reported in her September 2005 declaration).
Fathers failure to present evidence of his childrens needs during the period of retroactivity is similarly fatal to his motion for reconsideration. (See ante, fn. 4.)
Nor is relief under Code of Civil Procedure section 473, subdivision (b) available to Father. This section affords mandatory relief only from a judgment of default or dismissal, neither of which is at issue here. Discretionary relief also is improper in these circumstances. (See Generale Bank Nederland v. Eyes of the Beholder Ltd. (1998) 61 Cal.App.4th 1384, 1397-1398, 1399 (Generale Bank) [in all cases not involving default or dismissal, relief is discretionary]; Code Civ. Proc., § 473, subd. (b) [relief from an order taken against a party "through his . . . mistake, inadvertence, surprise, or excusable neglect"].) Denial of such relief will not be disturbed on appeal absent a clear showing that the trial court abused its discretion. (Generale Bank, at p. 1399.)
Some courts extend such relief in circumstances that are the procedural equivalent of default or dismissal, as when a party has been deprived of his day in court. (See, e.g., In re Marriage of Hock & Gordon-Hock (2000) 80 Cal.App.4th 1438, 1443.) In this case, Father fully adjudicated the issues with evidence and argument. (Id. at p. 1444.)
A party seeking discretionary relief due to attorney error must show that the mistake was excusable. (Generale Bank, supra, 61 Cal.App.4th at p. 1399.) Father seeks relief based on the mistakes of his attorney, which include his ignorance of the local rule precluding the filing of tax returns, his failure to offer the tax return as evidence due to his mistaken belief that Mother had provided it to the trial court, his lack of awareness that June 9, 2006, was the final child support hearing, and his failure to cite relevant case law. Code of Civil Procedure section 473, subdivision (b) does not provide relief from "all the professional mistakes an attorney might make in the course of litigating a case." (Generale Bank, at p. 1400.) Inadequate performance, such as a failure to prepare for a hearing, advance an argument, or " `make a skillful presentation of a clients case " does not warrant relief. (Id. at pp. 1400-1401; see Garcia v. Hejmadi, supra, 58 Cal.App.4th at pp. 682-683.) Indeed, " `ignorance of the law, coupled with negligence in ascertaining it will certainly sustain a finding denying relief. " (Generale Bank, at p. 1402.)
DISPOSITION
For these reasons, we affirm both orders, with costs to Mother. Additionally, although we reject Fathers arguments, we do not find them so wholly devoid of merit as to warrant the imposition of sanctions and, therefore, deny Mothers request for sanctions on appeal.
We concur:
SWAGER, J.
MARGULIES, J.