Opinion
G054778
11-14-2019
In re the Marriage of DEBORAH K. and JOHN M. RESTAINO, JR. DEBORAH K. RESTAINO, Appellant, v. JOHN M. RESTAINO, JR., Respondent.
Law Offices of Marjorie G. Fuller and Marjorie G. Fuller; Brandmeyer, Gilligan & Dockstader and John J. Gilligan for Appellant. Law Offices of Steven E. Briggs, Steven E. Briggs and Luis A. McKissick for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 05D001004) OPINION Appeal from a judgment of the Superior Court of Orange County, James L. Waltz, Judge. Affirmed in part, reversed in part and remanded with directions. Law Offices of Marjorie G. Fuller and Marjorie G. Fuller; Brandmeyer, Gilligan & Dockstader and John J. Gilligan for Appellant. Law Offices of Steven E. Briggs, Steven E. Briggs and Luis A. McKissick for Respondent.
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In this appeal, the fourth arising from the dissolution of Deborah and John Restaino's marriage, Deborah contends the court erred in three ways: first, it erroneously interpreted one of our prior opinions in this matter, and as a result it undervalued her interest in a community business; second, it abused its discretion in eliminating her spousal support and reducing spousal support arrearages; and, third, it abused its discretion in denying her attorney fees. We agree the court erred in eliminating spousal support altogether. In all other respects we affirm.
To avoid confusion, we refer to the parties by their first names. No disrespect is intended.
FACTS
As this is the fourth appeal in this matter, we present a brief version of the facts.
The parties separated in November 2004, ending their 21-year marriage. In February 2005, Deborah filed a marital dissolution petition. Without objection, John obtained a judgment terminating the parties' marital status in July 2006. John, an attorney, filed a response to the petition with a schedule of assets that listed his "[e]quity share" in the law firm of Lopez, Hodes, Restaino, Milman & Skikos (Lopez Hodes) as a community asset.
In December 2006, John filed a declaration in which he stated Lopez Hodes was "winding down" "under the supervision of" an arbitrator, and that he had "entered into a [confidential] agreement with Lopez Hodes with respect to the termination of my interest."
Before trial, the parties entered into a stipulation whereby each received one-half of a $500,000 distribution from Lopez Hodes's arbitrator "on account of monies due [John] under the terms of [a] 'confidential agreement'" between the shareholders of Lopez Hodes. The stipulation described the funds received by each party "as a preliminary distribution of community property without prejudice."
In May 2007, the parties executed a stipulation stating John was "entitled to the payment of certain specified monies" under the confidential agreement relating to the winding down of Lopez Hodes. The stipulation provided, "The character of the monies to be paid to [John] has not yet been determined," and the parties agreed to have one-half of the funds distributed to each party's attorney to be held in interest-bearing bank accounts.
In the same month, John filed a declaration responding to an order to show cause, stating the confidential agreement negotiated for the winding down of Lopez Hodes was not "a buy-out of shares," because "all parties [agreed] it was nigh impossible to 'value' a pure contingency firm and, therefore, the money would be distributed as it . . . had been in the past; bonuses based upon partnership interest." A later declaration claimed the agreement provided "individuals [would] receive[] various bonus payments as a result of work performed on litigation that had been settled and it was further agreed that these individuals . . . would receive future bonuses based on other matters not yet concluded. [¶] Portions of the funds payable as a result of the terms of this settlement were attributable to my work at the firm prior to . . . separation and portions of these funds were attributable to work performed after the date of separation."
In November, John filed an order to show cause to reduce his spousal support obligation. The court began a hearing on it in February 2008. The hearing was continued to April 1, on which date the court took the matter under submission. Trial on the reserved issues began the next day. It was agreed the evidence presented on John's order to show cause would be considered as part of the trial evidence.
Trial was held on numerous dates over a period of several months. The court issued a tentative decision on February 6, 2009. The court issued a final statement of decision and entered judgment on the reserved issues on December 3, 2009.
The judgment awarded Deborah monthly spousal support of $6,200 plus 19 percent of John's "gross monthly earnings, bonuses, commissions, distributions or income over and above" base salary, retroactive to January 1, 2008.
The court also characterized the funds John received as a result of the winding down of Lopez Hodes as income. Its statement of decision noted the court did not admit any parol evidence "regarding the [confidential settlement a]greement" and "interpreted the document on its face . . . ." The court construed the agreement to mean "the sums due [John] on pending litigation matters . . . were bonuses or compensation due . . . by virtue of [John's] efforts or work performed either before or after the parties' separation."
Deborah appealed, contending the court had undervalued the marital standard of living, and that the court erred in characterizing the Lopez Hodes payouts as income. We affirmed the court's spousal support order, but we reversed the court's characterization of the Lopez Hodes payouts. We determined those payouts represented John's equity in the firm, not income, and the equity was a community asset. Accordingly, Deborah was entitled to a share of nearly all of the Lopez Hodes payouts, even the payouts designated as compensation for work performed post-separation. We gave the court "directions to equally divide between the parties all nonsalary proceeds received by [John] under the settlement agreement." (In re Marriage of Restaino (Jan. 13, 2012, G043194) [nonpub. opn.] (Restaino I).)
While that appeal was pending, two events of note occurred. First, on June 15, 2011, John filed an order to show cause to modify spousal support. It would take almost five years before the court ruled on that request, and that ruling is before us now. Second, the court forged ahead with a hearing on spousal support arrearages. (In re Marriage of Restaino (May 16, 2013, G045429) [nonpub. opn.] (Restaino II).) John appealed the court's order on arrearages, and we reversed on the ground that the issue of arrearages depended on the characterization of the Lopez Hodes payouts, which was an issue pending in Restaino I when the court issued its order, and thus the court lacked jurisdiction over arrearages. We also concluded the court had failed to consider all relevant factors in denying Deborah's motion for attorney fees. We reversed for "a determination, in light of our prior reversal of the December 2009 judgment, of the amount of spousal support arrearages, if any, husband owes to wife and her motion for attorney fees." (Restaino II, supra, G045429.)
The third appeal arising out of the parties' divorce was a separate civil action. Deborah alleged John violated his fiduciary duties in the handling of the Lopez Hodes distributions. (Restaino v. Restaino (May 11, 2018, G053468) [nonpub. opn.].) We affirmed a dismissal on the ground that the civil division lacked jurisdiction to set aside the family law judgment on reserved issues, which was res judicata as to Deborah's allegations.
Afterward, the court held a hearing on all of the issues on remand from the first two appeals, plus John's June 15, 2011, request to modify spousal support. The court evenly divided the nonsalary distributions from Lopez Hodes and rejected "Deborah's contention that a full and fair valuation of the community's interest in the law firm has never been completely determined and or there remains outstanding (left-over) or un-adjudicated community property claims regarding the long ago dissolved law firm." It found that John owed $72,525 in arrearages from the years 2005 through June 30, 2011 (the date John originally filed his request to modify spousal support. It completely eliminated John's spousal support obligation as of June 15, 2011. And the court denied both parties' requests for attorney fees. Deborah timely appealed.
DISCUSSION
Broadly speaking, Deborah raises three issues in this appeal. First, she contends the court misinterpreted Restaino I when it held its task on remand was simply to divide and distribute the nonsalary distributions from Lopez Hodes. Deborah contends the court's mandate was much broader: to appraise and value John's equity interest in Lopez Hodes. Second, Deborah contends the court erred in setting spousal support at zero, and also in reducing the arrearages John owed. Finally, she contends the court abused its discretion in denying her need-based attorney fees.
The Lopez Hodes Distributions
Deborah first contends the court misinterpreted Restaino I. The court interpreted our opinion to mean that it should simply add up the nonsalary distributions from the Lopez Hodes settlement, divide by two, and pay each party their share as community property. We agree with the court's interpretation.
In the very first paragraph of Restaino I, we declared our intent to reverse "with directions to equally divide between the parties all nonsalary proceeds received by husband under the settlement agreement." (Restaino I, supra, G043194, italics added.) Deborah had acknowledged that "'[p]rofessional practices are difficult assets to value for purposes of property division and marital actions . . . .'" (Ibid.) In light of that difficulty, we stated, "In some circumstances an agreement between members of a law firm concerning the nature of their interest in the firm can affect a family law court's characterization of a spouse's interest upon dissolution of his or her marriage," citing In re Marriage of Nichols (1994) 27 Cal.App.4th 661. (Restaino, supra, G043194.) We concluded: "[W]e construe the nonsalary and independent contractor payments as a quantification of [John's] interest in the firm. Thus, except for the sums designated as husband's postseparation salary and independent contractor compensation, the payments awarded to him under the confidential settlement and release constitute his equity interest in Lopez Hodes . . . ." (Ibid., italics added.) We then reversed the court's ruling "on the extent of [John's] interest in his former law firm and the matter is remanded to the superior court for further proceedings consistent with this opinion."
Given our explicit directions to the court, coupled with our analysis of using a shareholder agreement to value equity in a firm, and our finding that the payments under the settlement agreement "constitute" John's equity and represent "a quantification of [John's] interest in the firm," the court got it right. The nonsalary payments under the settlement agreement constituted John's entire equity in Lopez Hodes. The court's task was simple: divide by two. And that is exactly what it did.
At least initially, that seemed to be Deborah's understanding as well. Shortly after the remand in Restaino I, Deborah told the court, "On remand, the only matter that must be determined is exactly how much John was awarded under the confidential settlement and release based on his equity interest in Lopez Hodes, so those amounts may be divided equally between the parties."
She now contends otherwise, relying on language in the disposition of Restaino I reversing the judgment "on the extent of respondent's interest in his former law firm . . . ." Since the judgment was reversed as to John's interest in the law firm, Deborah reasons, the court's task must have been to value that interest. That interpretation is fanciful and ignores the entire thrust of the opinion in Restaino I. We remanded for the court to calculate John's interest in the equity of his former law firm because the court needed to do the arithmetic. But it did not need to value John's equity interest. John's equity interest had already been valued.
Deborah also relies on language in the opinion where we set forth general principles for valuing a law firm. Deborah infers that since we quoted principles for valuing a law firm, we must have meant for the court to appraise John's interest in the law firm. But plainly, our citation to general valuation principles was simply to support the statement that came immediately after: "Merely because Lopez Hodes took cases on a contingency fee basis did not preclude valuation of husband's interest in it." (Restaino I, supra, G043194.) In treating all of the Lopez Hodes disbursements as income, the court had essentially assigned no value at all to John's equity interest. We rejected that approach. We went on to conclude that the settlement agreement had, in fact, paid out John's entire equity interest, which was to be divided as a community asset rather than as John's income. In setting forth the general principles of valuing a law firm, at no point did we suggest the court was to engage in a free-ranging reappraisal of Lopez Hodes.
Spousal Support
Next, Deborah contends the court erred in eliminating her spousal support as of June 15, 2011, the date John filed his order to show cause re: spousal support. In granting John's request and eliminating spousal support altogether, the court relied on two circumstances: a marked reduction in John's income and Deborah's failure to become gainfully employed. Deborah faults the court's ruling on four fronts. She contends the court (1) failed to consider her needs, (2) arbitrarily assigned her an earning capacity of $45,000 per year, (3) abruptly cut off her support without a Gavron warning, and (4) miscalculated John's ability to pay. We review a court's decision to modify spousal support for abuse of discretion. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, 480.) We agree with her on the first two grounds, but not on the last two.
In re Marriage of Gavron (1988) 203 Cal.App.3d 705 (Gavron)
"Modification of spousal support . . . requires a material change of circumstances since the last order. [Citations.] Change of circumstances means a reduction or increase in the supporting spouse's ability to pay and/or an increase or decrease in the supported spouse's needs. [Citations.] It includes all factors affecting need and the ability to pay." (In re Marriage of McCann (1996) 41 Cal.App.4th 978, 982.) If a court finds a material change of circumstances, the court must consider the criteria set forth in Family Code section 4320 in determining the amount, if any, of the modified spousal support. (In re Marriage of West (2007) 152 Cal.App.4th 240, 247.)
All statutory references are to the Family Code unless otherwise stated.
Here, the court found a material change in circumstances based on John's reduced income. John's original spousal support obligation was based on an average salary of over $17,000 per month. The court found that in 2012 John averaged $7,300 per month; in 2013, $8,000 per month; in 2014, $4,000 per month; and in 2015, $10,500 per month. John's income dropped because he formed his own new law firm with his new spouse. The court determined that John's "recurring and sustainable net disposable income" is $10,500 per month, and that his ability to pay spousal support fluctuates between zero and $1,000 per month.
There seems to be little dispute that John suffered a material change of circumstance. Deborah concedes in her brief that, "assuming all the financial facts as found by the trial court" were correct, "a reduction may have been appropriate." And she does not truly contest the court's basic findings of financial fact (with one exception discussed below). Instead, her contention is that it was error to eliminate support altogether. The issue, therefore, is not whether John suffered a material change of circumstance, but instead whether the court properly applied the section 4320 factors in eliminating spousal support altogether.
Section 4320 contains several mandatory considerations relevant here: the parties' earning capacity, taking into account their skills, the current market, their need for retraining, and any disadvantage one party incurred by previously forgoing employment in lieu of domestic duties); the extent to which the supported party contributed to the career of the other (by, for example, putting the other through school); ability to pay; the needs of each party based on the marital standard of living); each parties' assets and debts; the duration of the marriage; the ability of the supported party to engage in gainful employment; the parties' age and health; the balance of hardships to each party; "[t]he goal that the supported party shall be self-supporting within a reasonable period of time" (id., subd. (l)); and any other factors the court determines are just and equitable.
Deborah's Financial Need
Deborah identifies multiple factors that, she contends, the court failed adequately to consider. The first was her need. Indeed, while the court's statement of decision did generically refer to the parties' "reasonable needs," the court did not specifically discuss or make any findings as to her needs. The court did not wholly ignore this factor—the actual factor is the parties' needs "based on the [marital] standard of living." (§ 4320, subd. (d).) It specifically found that, given John's diminished earning capacity, and the passage of time, little weight was to be given to the prior marital standard of living. The court did not take the next step, however, and determine what Deborah's reasonable needs are. (See In re Marriage of McTiernan & Dubrow (2005) 133 Cal.App.4th 1090, 1107 [describing as a "truism in most dissolved marriages" that the parties cannot both maintain the marital standard of living, but continuing, "It does not, however, excuse consideration of the supported party's needs under the statute"].)
According to her income and expense declaration, she needed $14,246 per month. Plainly, the court was not compelled to accept that claim, but it was required to make some assessment of Deborah's needs in determining the amount of spousal support, if any. (See In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 304 ["the court does not have discretion to ignore any relevant circumstance enumerated in the statute. To the contrary, the trial judge must both recognize and apply each applicable statutory factor in setting spousal support"]; id. at p. 307 ["We further note that the trial court's findings in this case, though admirably detailed as to other points, do not specify [wife's] actual monthly need for support." "On remand, the court should determine and articulate [wife's] reasonable needs"]; In re Marriage of Hoffmeister (1984) 161 Cal.App.3d 1163, 1175 ["a supported spouse's need is an essential element in determining whether he or she is entitled to an increase in spousal support . . . . Simply stated, the need of one spouse must be established independently of the other's ability to pay"].) As the Family Law Rutter Guide recommends in a practice pointer, "always request findings on the 'needs' of the supported spouse (reflected by the parties' general station in life during marriage) and whether the amount awarded is sufficient to meet those needs." (Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2018) § 6:1087.) Those findings were not made here. That was error.
Deborah's Earning Capacity
Deborah also contends there was no substantial evidence to support imputing $45,000 per year in income to her. Once again, we agree.
Section 4320 requires a court to consider "the earning capacity of each party" (id., subd. (a)), "[t]he ability of the supported party to engage in gainful employment" (id., subd. (g)), as well as "[t]he goal that the supported party shall be self-supporting within a reasonable period of time" (id., subd. (l)). Collectively, these provisions authorize a court to impute income to a supported spouse. As one court explained, "[A] supported spouse cannot make unwise decisions which have the effect of preventing him or her from becoming self-supporting and expect the supporting spouse to pick up the tab." (In re Marriage of Schaffer (1999) 69 Cal.App.4th 801, 812.) To warrant imputation of income, the party seeking to modify spousal support must establish that the other had the ability to work and the opportunity to work at a given income. (In re Marriage of Simpson (1992) 4 Cal.4th 225, 234; In re Marriage of Bardzik (2008) 165 Cal.App.4th 1291, 1301-1302 (Bardzik).) These evidentiary requirements serve an important purpose: "Without evidence of ability or opportunity to earn the money, the power to impute income would easily devolve into a trial judge's power to arbitrarily establish a support order at any given level, plucked from mid air, just as long as it is over the level otherwise required by the payor parent's actual, taxable income." (Bardzik, at p. 1301.)
Our standard of review is mixed. "A trial court's decision to impute income to a parent for . . . support purposes based on the parent's earning capacity is reviewed under the abuse of discretion standard." (In re Marriage of Destein (2001) 91 Cal.App.4th 1385, 1393.) The actual amount of income, on the other hand, must be supported by substantial evidence. (In re Marriage of Cohn (1998) 65 Cal.App.4th 923, 931 (Cohn).)
We have little trouble concluding the court acted within its discretion in deciding to impute income to Deborah. In setting spousal support in 2009, the court "allow[ed Deborah] additional time to complete her education which [was then] in progress." "The Court expect[ed] that [Deborah would] be able to complete her educational goals within a period of three to four years and achieve earnings of $45,000.00 per year as she testified." And it found "that it is reasonable that [Deborah] become self supporting within a reasonable amount of time." In the trial from which this appeal lies, Deborah testified she stopped eight credits shy of a degree in interior design. She has been prevented from completing that degree, she said, because she owes the school between $5,000 and $7,000, and the school would not let her continue her education until she paid it. At the same time, however, she admitted she has approximately $350,000 in liquid assets. She has not dipped into that fund, she said, because she owes money to her father and attorneys. But that makes little sense. Her school debt is a tiny fraction of her liquid assets, and a degree would obviously enhance her earning capacity for purposes of paying back her remaining debts. Instead, she was spending 35 hours per week volunteering for a nonprofit. "To the extent Deborah claimed that despite her best efforts she was unable to find employment commensurate with her age, education and work history," the court found, "she was not credible." Her failure to make a serious effort at becoming self-supporting warranted imputing income to her.
Where the court stumbled, however, is in determining the amount of income to impute. "[F]igures for earning capacity cannot be drawn from thin air; they must have some tangible evidentiary foundation." (Cohn, supra, 65 Cal.App.4th at p. 931.) As the court explained in In re Marriage of Berger (2009) 170 Cal.App.4th 1070 (Berger), it is not enough to merely suspect that a party could, in light of her skills and experience, make a certain income—"that probability must be evidenced." (Id. at p. 1079.) And the evidence must show the party could currently make that amount. (State of Oregon v. Vargas (1999) 70 Cal.App.4th 1123, 1127.)
Here, the principal evidence the court relied on was Deborah's testimony, from a prior trial, that she hoped to be earning $45,000 per year upon completing her education in interior design. But there was not, so far as the record reveals, an offer on the table, nor any other evidence to ground Deborah's expectation into the reality of her current circumstances. Stale hopes and expectations are not evidence of an actual, current opportunity.
The other evidence the court may have relied on was Deborah's testimony that, in 2006, when she was laid off from her job in the title industry, she earned approximately $45,000 per year. But the concept of earning capacity is based on current circumstances. Her prior salary, though relevant, was inadequate by itself to establish her earning capacity 10 years later. (See Berger, supra, 170 Cal.App.4th at pp. 1079-1080 [the court properly refused to impute income based on "evidence merely establishing that the spouse had once earned a certain salary, and thus presumably could again"]; In re Marriage of Eggers (2005) 131 Cal.App.4th 695 [error to impute income in the amount of former salary where there was no evidence of a current ability and opportunity to earn that much].)
The husband in Bardzik, supra, 165 Cal.App.4th 1291, made a similar mistake: his proof was limited to the wife's former income. In explaining where he went wrong, the court provided a helpful list of the sorts of proof capable of establishing the opportunity requirement, but which was lacking both there and here: "want ads for persons with the credentials of the potential imputee, opinion testimony (e.g., from a professional job counselor) that a person with the imputee's credentials could readily secure a job with a given employer (or set of employers), or pay scales correlating ability and opportunity with the income to be imputed. Nor was there any vocational examination. [§ 4331, subd. (a).] What there was—merely the fact of retirement and previous income—was not sufficient . . . ." (Id. at p. 1309.) Because the evidence here failed to establish that Deborah had the opportunity to work at $45,000 per year, the court erred.
Gavron Warning
Next, Deborah contends it was error to eliminate her spousal support based on her failure to become self-supporting because she did not receive adequate Gavron warnings. (Gavron, supra, 203 Cal.App.3d 705.) Gavron stands for the simple proposition that before spousal support may be drastically reduced or terminated based on the failure to become self-supporting, the supported party must be made aware of the expectation to become self-supporting. The reason for the rule is simple fairness—"onerous legal and financial consequences" should not be sprung on a supported party out of the blue. (Id. at p. 712.) Because the goal is simply to eliminate surprise, any warning that reasonably apprises the supported party of the need to become self-supporting will do; there is no Gavron formula. It can even be implied in appropriate circumstances. (Ibid.)
Here, Deborah was adequately apprised of the court's expectation that she become self-supporting. In the 2009 judgment on reserved issues, the court stated as much: "The Court finds that it is reasonable that [Deborah] become self supporting within a reasonable amount of time." It further explained it was "allow[ing] [Deborah] additional time to complete her education which is now in progress." "The Court expects that [Deborah] will be able to complete her educational goals within a period of three to four years and achieve earnings of $45,000.00 per year as she testified. The Court orders that the matter be reviewed in the year 2011 as to the amount and reasonableness of the support she is receiving."
Deborah's only response is that the judgment did not make her aware that she needed to become self-supporting "at any specific time." But nothing in Gavron requires a specific timetable. It simply requires that the supported spouse be made aware of "the judicial expectation of future self-sufficiency." (Gavron, supra, 203 Cal.App.3d at p. 712.) Of course, the decision to cut off support completely still requires the proper exercise of the court's discretion, accounting for all of the factors under section 4320. Our holding is simply that Gavron presents no obstacle to cutting off support under the circumstances.
John's Income
Deborah contends the court's support order was further flawed by undervaluing John's income. In particular, the court chose to average John's income over the four-year lifespan of the firm he created with his new wife. Deborah contends this undervalued his income, particularly in light of the large income his firm produced in the six months immediately prior to the hearing—averaging over $50,000 per month. We review the court's selection of a representative timeframe for abuse of discretion, and we find no abuse here.
The court set John's monthly income at $10,500 per month. In prior years, John's income varied, but averaged, according to the court's findings, as follows: in 2012, $7,300 per month; in 2013, $8,000 per month; in 2014, $4,000 per month; in 2015, $10,500 per month. An expert retained jointly by the parties, Drew Hunt, testified that for the first six months of 2015, John's share of the net income from his law firm was over $51,000 per month. John testified this was due to two relatively large payouts from cases that had recently concluded. That full amount was not necessarily available to John as income, however, as much of it was being used to pay down debts John's law practice had incurred due to cash flow issues in prior years. Hunt opined that John's prospective, recurring income would be $13,800 per month, but the court concluded Hunt had failed to adequately account for the law firm's debts and thus chose a lower number.
In assessing the court's ruling, both parties rely extensively on In re Marriage of Riddle (2005) 125 Cal.App.4th 1075 (Riddle). There, as here, husband's income was volatile. (Id. at p. 1078.) The court calculated his income by averaging just two months of income (the year to date), arriving at the figure $21,950 per month. (Ibid.) It then imposed child and spousal support totaling approximately $8,000 per month. (Ibid.) The choice of timeframe truly mattered. Had the court utilized a 12-month timeframe, his total income would have been approximately $8,000 per month, leaving him with nothing after paying child and spousal support. (Id. at p. 1079.)
The Court of Appeal held this was an abuse of discretion. (Riddle, supra, 125 Cal.App.4th. at p. 1081.) In setting a fixed amount of support in the face of fluctuating income, the court must, do the best of its ability, "predict likely income for the immediate future, as distinct from extraordinarily high or low income in the past." (Id. at p. 1082.) To that end, "the time period on which income is calculated must be long enough to be representative, as distinct from extraordinary." (Ibid.) This being a discretionary call, the court refused to articulate a bright-line rule. Nonetheless, it found in the child support statutes "a presumption that the most recent 12 months is certainly an appropriate period in most cases." (Id. at p. 1083.) But that presumption must always be applied with an eye towards representativeness. If the bulk of a person's income arrives only once every two or three years, then a 12-month sample will be inappropriate. And, as in Riddle, an overly short sample tends to exaggerate fluctuations. (Id. at p. 1084.)
Predicting the future is a notoriously fraught task. In many cases, such as this, there will be no clear right answer on the question of the most representative timeframe. A range of options may be supportable given the facts. We will intervene to correct a court's determination only where the court truly colors outside the lines. Deborah has not shown that to be the case here. She exclusively relies on the first six months of 2015, in which Hunt calculated John's share of the firm's income to be $51,000 per month. But she makes no effort to meaningfully address the loans that his firm needed to pay back, nor the fact that the first part of 2015 was skewed by two large payouts, nor the fact that John's income is consistently volatile. These were eminently reasonable considerations in selecting a representative timeframe. Indeed, Hunt testified that it would be important to have a long look back as a representative timeframe to "smooth out some of the anomalies" in John's income. The court did just that. The court's ruling, supported by evidence, was well within its discretion.
Arrearages
In Restaino I, we held that the Lopez Hodes distributions constituted a payout on John's equity interest, not income. As such, Deborah was entitled to half the distributions. Above, we concluded the court correctly applied our ruling by engaging in the simple task of calculating the total nonsalary payments from Lopez Hodes and dividing by two. A collateral effect of shifting those large payments from the income category to the assets category was, naturally, to reduce the income category. Reduced income meant that John owed less in support, and thus less in arrearages. Quite a bit less. With the Lopez Hodes distributions included as income, John owed $905,822 in support arrearages between 2006 and 2010. After removing the distributions from John's income, the arrearages shrank to $72,525. This would all seem to be a very natural consequence of recategorizing the Lopez Hodes distributions from income to equity. And it was very much to Deborah's benefit: she received a full half of the distributions, including distributions that otherwise might have been deemed post-separation income, for which she would have received nothing.
Nonetheless, Deborah contends it was error to reduce the amount of arrearages John owed. In particular, she claims that it amounted to an amendment of the 2009 judgment on reserved issues, which, because it was final, was beyond the court's jurisdiction. (See In re Marriage of Gruen (2011) 191 Cal.App.4th 627, 639 [retroactive modification of a final support order exceeds the court's jurisdiction].)
The flaw in that logic is patent. In recalculating John's arrearages, the court was not modifying the prior support order in any way. It was simply applying the correct amounts of income to that order. The court was admirably detailed in the manner of its calculations, including that it was applying the Smith/Ostler formula, and its calculations are entirely consistent with the amount and percentages of support ordered in the 2009 judgment on reserved issues. Moreover, to the extent the 2009 judgment improperly categorized the Lopez Hodes distributions as income, it was not final: she appealed it. There was no error.
In re Marriage of Ostler & Smith (1990) 223 Cal.App.3d 33.
Attorney Fees
Finally, Deborah argues the court erred in denying her motion for need-based attorney fees under sections 2030 and 2032. She contends the court, once again, failed to consider her needs. This time, we disagree.
Section 2030, subdivision (a)(1) declares, "the court shall ensure that each party has access to legal representation . . . by ordering, if necessary based on the income and needs assessments, one party . . . to pay to the other party, or to the other party's attorney, whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding . . . ." (Ibid.) "The purpose of section 2030 is to ensure parity." (In re Marriage of Cryer (2011) 198 Cal.App.4th 1039, 1056.)
Section 2032, subdivision (b), requires a "court [to] take into consideration the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party's case adequately," including "to the extent relevant, the circumstances of the respective parties described in Section 4320." Thus "section 2032, . . . not only requires that the court consider the financial resources of each party, but also requires a broader analysis of the parties' relative circumstances." (In re Marriage of Cryer, supra, 198 Cal.App.4th at p. 1056.)
"In making this determination, the trial court has broad discretion" and "we will not reverse absent a showing that no judge could reasonably have made the order, considering all of the evidence viewed most favorably in support of the order." (In re Marriage of Falcone & Fyke (2012) 203 Cal.App.4th 964, 975.) But "'the record must reflect that the trial court actually exercised that discretion, and considered the statutory factors in exercising that discretion.'" (Ibid.) Thus, a court's affirmative failure or refusal "to exercise that discretion" constitutes "sufficient grounds, by itself, to reverse [its] decision." (In re Marriage of Tharp (2010) 188 Cal.App.4th 1295, 1314.)
Here, the record reflects that the court considered Deborah's needs. For example, the court stated, "Today, Deborah has more assets and wealth than John." The court further noted that the substantial Lopez Hodes payouts to both parties left them "with substantial assets and an ability to pay their own litigation expenses." It went on to observe that, during the litigation, "both sides were in financial parity, more or less as and for ability and need for attorney fees and costs." These statements plainly demonstrate the court considered Deborah's ability to pay her attorney fees.
The court further found that the amount of fees Deborah was claiming was inflated by her decision to over litigate the case: "During the litigation journey, Deborah engaged in litigation tactics that consumed 1.2 million dollars in fees, that money lost forever. John spent about 900 [thousand] dollars in fees, a lot of his fees were the direct result of Deborah over litigating the case." --------
Deborah's only real response to this is to note that John still owes her $650,000 under the trial court's recent orders. But that does not help Deborah here: John has to pay that amount, and when he does, she can use the money to pay her attorneys. The court's findings were adequate, and Deborah has not shown they lacked evidentiary support. Accordingly, the court did not err in denying Deborah's attorney fee request.
DISPOSITION
The court's order reducing Deborah's spousal support to zero as of June 15, 2011, is reversed. The court is instructed to conduct a new hearing on spousal support consistent with this opinion. In all other respects, the postjudgment orders are affirmed. The parties shall bear their own costs incurred on appeal.
IKOLA, J. WE CONCUR: BEDSWORTH, ACTING P. J. THOMPSON, J.