Opinion
E051995 Super.Ct.No. RID223469
11-07-2011
In re the Marriage of WILLIAM and SHERYL STEVENS. WILLIAM STEVENS, Appellant, v. SHERYL STEVENS, Respondent.
Law Offices of Lawrence R. Bynum and Lawrence R. Bynum for Appellant. No appearance 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
OPINION
APPEAL from the Superior Court of Riverside County. David A. Gunn, Judge. Reversed and remanded with directions.
Law Offices of Lawrence R. Bynum and Lawrence R. Bynum for Appellant.
No appearance for Respondent.
I
INTRODUCTION
William Stevens (husband) appeals a spousal support order requiring him to pay Sheryl Stevens (wife) monthly spousal support in the amount of $3,000. Husband contends the support award was improperly calculated. He asserts that, while he should pay fixed support based on his regular salary, any additional support based on his bonus income should be calculated as a percentage of his fluctuating annual bonus under In re Marriage of Ostler & Smith (1990) 223 Cal.App.3d 33 (Ostler) and In re Marriage of Mosley (2008) 165 Cal.App.4th 1375 (Mosley). Husband also contends the trial court erred in failing to impute any value to the parties' 2003 Ford truck and household furnishings.
Wife has not filed a respondent's brief. This court thus "may decide the appeal on the record, the opening brief, and any oral argument by the appellant." (Cal. Rules of Court, rule 8.220(a)(2).)
We conclude the trial court abused its discretion in awarding fixed permanent spousal support based on husband's regular salary and annual fluctuating bonus. Not only is the order unclear as to the bonus amount the trial court relied upon in calculating support but, in addition, the trial court erred in rejecting the Ostler and Mosley method of calculating support as to husband's fluctuating annual bonus. The judgment is reversed and the matter is remanded for recalculation of spousal support. A fixed amount of support shall be awarded based on husband's regular, monthly salary. Consistent with Ostler, supra, 223 Cal.App.3d 33 and Mosley, supra, 165 Cal.App.4th 1375, additional support shall be ordered as a percentage of husband's annual bonus, to be paid within a reasonable, specified period of time after husband receives his bonus.
As to the trial court placing a value of "0" on the 2003 Ford F-150 truck and household furnishings, we conclude there was sufficient testimony establishing this property had value and therefore it was an abuse of discretion to declare the property valueless. The matter is remanded for a determination of the reasonable value of the 2003 Ford F-150 truck and household furnishings.
II
FACTUAL AND PROCEDURAL BACKGROUND
A. Background Facts
Husband and wife were married in May 1980 and separated in November 2007, after 27 years of marriage. There are no minor children of the marriage. On January 8, 2008, husband filed a petition for dissolution of marriage.
On February 7, 2008, wife filed an order to show cause (OSC) re spousal support, in which she requested guideline spousal support. In his responsive declaration, husband consented to the court ordering reasonable spousal support. On September 9, 2008, the trial court ordered husband to pay spousal support in the amount of $1,540 per month. On December 11, 2008, wife filed an OSC to modify spousal support. In January 2009, husband filed a responsive declaration and income and expense declaration, stating that his current income amounted to a monthly salary of $8,333 and a bonus of $100,000 for 2008. On March 30, 2009, the trial court increased spousal support to $3,361 per month.
On January 15, 2010, husband filed an OSC to modify spousal support because his annual bonus in 2009 was $60,000, which was $40,000 less than his 2008 bonus. Husband requested that the court order that the portion of spousal support based on his annual bonus be calculated as a percentage of his bonus, under Ostler, supra, 223 Cal.App.3d 33.
Husband stated in his OSC supporting declaration that wife received $1,551.23 biweekly ($3,361 per month) in spousal support, whereas husband received $937.69 biweekly ($2,031 per month) from his paycheck, after taxes and support deductions. Wife also received her own paycheck of $2,648 per month. As to husband's income from his annual bonus, husband stated in his declaration that his annual bonus is tied to how well the company performs.
During the OSC hearing in February 2010, the trial court denied husband's request to modify spousal support. The trial court stated it did not find a sufficient change in circumstances to modify temporary support but noted that the issue of permanent support would be revisited at the time of trial.
B. Trial on Permanent Spousal Support
The issue of permanent spousal support was tried on May 10 and 12, 2010. During the trial, husband and wife testified as follows.
Wife's testimony
Wife testified at trial that husband is president of Pacific States Utilities. His father founded the company. When husband's father passed away, husband inherited Pacific States Utilities and became president. Husband has worked for Pacific States Utilities since 1980 and has been president since 1997. Husband earned $136,323 in 2002, $135,902 in 2003, and $141,737 in 2004. Husband and wife's 2005 tax return shows husband earned $159,559. In 2006, husband earned most of the $202,000 income shown on husband and wife's 2006 tax return. Husband received a bonus every year, with the exception of the year husband's father died. According to wife's 2007 tax return, filed after the parties separated, husband earned $210,000 as president of Pacific State Utilities. This amount included an annual bonus in 2007 of $110,000. In 2008, husband earned $200,000. In 2009, husband earned $160,000.
Wife worked at Pacific States Utilities for 10 years, including five years as a subcontractor and five years as an employee. Wife was laid off in 2004 because "[t]hey sold the business." While wife worked at the company, she observed that husband signed company checks, hired, fired, and gave raises and bonuses. Husband determined the amount of raises and bonuses employees received, including himself. He had control of the business. There was a predetermined annual maximum amount designated for bonuses but husband determined how the bonus money would be distributed. Husband was required to show the vice-president how the bonus money was to be distributed. The vice-president would then authorize the bonuses.
During cross-examination, wife testified that husband was authorized to distribute $200,000 in bonus money among the company's employees. This amount of bonus money varied from year to year based on the earnings of the company. The amount to be distributed depended on how well the company did that year.
The parties own a 2003 Ford F-150 Super Crew truck, which was paid for in full with cash. Wife is in possession of and drives the 2003 Ford truck. Husband has not driven the 2003 Ford truck since the parties' separation. Husband drives a 2005 Ford F-150 truck. It is a company truck, paid for by his company. Pacific States Utilities also pays for his gas. When the parties separated, husband did not take any household furnishings.
Husband's Testimony
Husband testified that as president of Pacific States Utilities, he is a company employee. The company is not husband's business. The business is owned by someone else. Husband does not have any ownership interest in the business. The company's owner provided the family law court with a letter stating that husband does not own the company. Husband acknowledged he is the registered agent for service of process for the company. Husband's parents previously owned an interest in the company. Husband's father and a partner founded the company.
Husband's monthly salary is $8,333. He receives net pay of $937 every other week or $1,800 a month. The rest of his income goes to wife for support. Husband also receives an annual bonus, which varies from year to year. He received a $110,00 in 2007, a $100,000 bonus in 2008, and a $60,000 bonus in 2009. Husband's bonus is now less. Husband doesn't know how much his bonus will be until the end of the year. Some years he does not receive a bonus. Husband stated in his 2010 income and expense declaration that he received an average monthly bonus of $5,000. Husband clarified he did not receive a bonus every month. The $5,000 amount is what his annual bonus for the year averaged out to be per month.
In 2000, husband earned a salary of $100,000. In 2001, he earned $81,400. Husband's base salary for the past seven to eight years has been $100,000. Husband's biweekly income of $937 does not cover his expenses. He has to use his savings for his living expenses.
Husband did not take any furnishings when he moved out of the family home. He only took his clothing and a couple items from the garage, such as a shovel and rake. His company provides him with a car and pays for gas used when he is working. Wife's 2003 Ford truck is owned free and clear. It was paid off during the marriage. Husband estimated wife's truck's value to be $5,000 to $8,000. The household furnishings were of good quality. The 2,200-square-foot family home was fully furnished. Husband estimated the value of the furnishings, including computers, to be $10,000 to $15,000.
Closing Argument
During closing argument, husband's attorney argued the evidence established the furnishings had a value of approximately $6,000 and wife had possession of all of the furnishings. Husband requested the court to award to wife the 2003 Ford truck at the "uncontroverted value of $8,000." Husband is living on approximately $2,500 a month. Husband requested the court to award wife fixed spousal support in the amount of $1,250, based on husband's monthly salary of $8,333, and to order additional support under Ostler, supra, 223 Cal.App.3d 33 and Mosley, supra, 165 Cal.App.4th 1375, based on a percentage of husband's annual bonus.
Wife's attorney claimed husband made almost $15,000 a month, whereas wife earned $2,500 a month. Wife's attorney argued support should be based on husband receiving income of $13,500, plus interest, and support should not be calculated under Ostler, supra, 223 Cal.App.3d 33 because husband's income was "regular." Husband received a bonus every year except the year his father died. Furthermore, husband could write a check for himself for whatever amount he wanted. Wife, on the other hand, was at the mercy of husband's power and control. Wife accused husband of hiding income. Wife requested $5,000 per month in spousal support.
Husband's attorney responded that wife, not husband was "hiding the ball." Furthermore, wife had testified husband did not set the amount of the bonus. The bonus was based on the amount the company sells. Husband claimed there was no evidence husband made $15,000 a month.
The transcript states that husband's attorney stated, "$15,000 in a year." This apparently either was a misstatement or counsel omitted clarifying that he was referring to a monthly salary of $15,000, earned in a year.
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After the trial court heard testimony and oral argument, it took the matter under submission and filed a written decision on June 9, 2010. The court ordered husband to pay wife monthly spousal support in the amount of $3,000 based on the following factual findings. Husband's salary as President of Pacific States Utility is $108,000 a year or $8,333 per month. He also receives a yearly bonus, which fluctuates and may be based on yearly earnings, presumably those of the company. The trial court noted there was no testimony as to why earnings fluctuated or to what degree the fluctuation in earnings affected husband's bonus. Husband received a bonus every year except one year and it is unclear why husband did not receive a bonus. The court noted that in 2007 and 2008, husband's bonuses were close to 100 percent of his salary. In other years his bonuses were less but never less that 50 percent to 60percent of his salary. Husband's family owned the company and, as president of the company, husband controlled the salaries and bonuses.
The trial court declined to award a percentage of husband's bonus as spousal support under Ostler, supra, 223 Cal.App.3d 33. The court explained: "The Court considered but did not adopt [husband's] request that the Court utilize a percentage division of the bonus as discussed in Marriage of Ostler and Smith (1990) 223 Cal.App.3d 33. The Court finds such a division unnecessary and inequitable in this case."
With regard to the 2003 Ford truck, the trial court found: "The court has heard no evidence as to the value of this vehicle, other than opinion testimony by [husband], so awards it to [wife] at zero (0) value." As to the household furnishings, the court found: "Household furniture and furnishings the court has no means to determine the value of such property and rewards it to [wife] at zero (0) value."
Motion for Reconsideration
On June 16, 2010, husband filed a motion for reconsideration and clarification of the June 9, 2010, order. In husband's supporting declaration, husband stated that the trial court erroneously found that husband has control over the company employee salaries and bonuses and that husband's family owns Pacific States Utilities. The court also failed to acknowledge that in 2009, husband's bonus was only $60,000, in 2005 his bonus was $50,000, and in 2004, his bonus was $35,000. As wife testified, the amount of bonuses is based upon the performance of the company, and the company owner determines how the bonuses are paid. Husband also noted that he had provided testimony in which he estimated the value of the 2003 Ford truck was $8,000 and the value of the household furnishings was $6,000. At trial, wife did not disagree with or refute these estimated values. Wife opposed husband's motion for reconsideration.
The trial court heard husband's motion for reconsideration and ordered that "[t]he court shall reserve on the issue of household furniture and furnishings and personal property. Counsel shall also meet and confer as to those issues." As to spousal support, the court denied husband's motion for reconsideration. No mention was made in the order regarding the 2003 Ford truck. Judgment was entered on October 25, 2010. The judgment states in relevant part that husband shall pay wife monthly permanent spousal support in the amount of $3,000.
As to the household furnishings, the judgment states: "[T]he Court has no means to determine the value of such property and rewards it to [wife] at zero (0) value." As to the 2003 Ford truck, "The Court has heard no evidence as to the value of this vehicle, other than opinion testimony by [husband], so awards it to [wife] at zero (0) value." In addition, the trial court ordered that pursuant to its ruling on the motion for reconsideration, "The court shall reserve on the issue of household furniture and furnishings and personal property. Counsel was ordered to meet and confer as to those issues. [¶] . . . [¶] The Court declined to make any changes or further orders regarding the . . . truck. . . . [¶] . . . [¶] The Court denied [husband's] Motion for Reconsideration of the order with regard to spousal support."
III
SPOUSAL SUPPORT
Husband contends the trial court abused its discretion in awarding wife fixed monthly support in the amount of $3,000, based on his base monthly salary of $8,333, combined with an unspecified amount attributable to his receipt of an annual fluctuating bonus. Husband argues spousal support based on his bonus income should be calculated under Ostler, supra, 223 Cal.App.3d 33, by awarding wife as support a fixed percentage of husband's after-tax bonus income. We agree.
Husband also complains that the support order is ambiguous as to what amount of bonus income the trial court relied upon in calculating spousal support in the amount of $3,000. This hinders husband's ability to seek modification based on changed circumstances. In addition, husband urges this court to reverse the support order because the portion of his fixed monthly salary he receives (approximately $1,800), after tax and support deductions, is insufficient to cover his living expenses and therefore he must rely on his annual bonus income, which is uncertain and fluctuates.
A. Standard of Review
"As a general rule, we review spousal support orders under the deferential abuse of discretion standard. [Citation.] We examine the challenged order for legal and factual support. 'As long as the court exercised its discretion along legal lines, its decision will be affirmed on appeal if there is substantial evidence to support it.' [Citations.] 'To the extent that a trial court's exercise of discretion is based on the facts of the case, it will be upheld "as long as its determination is within the range of the evidence presented."' [Citation.]" (In re Marriage of Blazer (2009) 176 Cal.App.4th 1438, 1443.) We review de novo questions of law that are based on undisputed facts. (Ibid.)
B. Discussion
Permanent spousal support "'is governed by the statutory scheme set forth in sections 4300 through 4360. Section 4330 authorizes the trial court to order a party to pay spousal support in an amount, and for a period of time, that the court determines is just and reasonable, based on the standard of living established during the marriage, taking into consideration the circumstances set forth in section 4320.'" (In re Marriage of Nelson (2006) 139 Cal.App.4th 1546, 1559; see In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 302.) . . . 'The trial court has broad discretion in balancing the applicable statutory factors and determining the appropriate weight to accord to each, but it may not be arbitrary and must both recognize and apply each applicable factor.' [Citation.]" (In re Marriage of Blazer, supra, 176 Cal.App.4th at pp. 1442-1443.)
Our analysis here turns on the trial court's assessment of "'the ability of the supporting party to pay spousal support, taking into account the supporting party's . . . income . . . ." ([Fam. Code,] § 4320, subd. (c).) . . . [W]e affirm the trial court's decision if it is supported in fact and law. [Citation.]" (In re Marriage of Blazer, supra, 176 Cal.App.4th at p. 1447.) After considering the Family Code section 4320 factors in calculating support, the trial court has the discretion to predicate part of the support on the obligor's unearned or prospective earnings, such as fluctuating bonuses.
Here, the amount of income the court relied upon in calculating spousal support was comprised of husband's base salary of $8,333 per month, plus his fluctuating annual bonus. The amount of the bonus relied upon is unspecified in the trial court's support order. The courts in Ostler, supra, 223 Cal.App.3d 33 and Mosley, supra, 165 Cal.App.4th 1375 rejected calculating spousal support based on inclusion of the supporting spouse's fluctuating bonus in the average monthly income. In Ostler, the court upheld the trial court order that the husband pay $3,000 per month in permanent spousal support, plus 15 percent of his annual gross cash bonus when the bonus was received. (Ostler, supra, 223 Cal.App.3d at pp. 42, 50.)
In Mosley, supra, 165 Cal.App.4th at page 1387, the court concluded that, when there is a fluctuating bonus, an Ostler percentage should be assessed "over and above guideline support" for "any discretionary bonus actually received." (Mosley, supra, 165 Cal.App.4th at p. 1387.) This is because "future bonuses are not guaranteed, and it would be unfair to require the obligor to file motions for modification every time a bonus is reduced." (In re Marriage of Tong and Samson (2011) 197 Cal.App.4th 23, 27, citing Ostler, supra, 223 Cal.App.3d at pp. 41-42.) In In re Marriage of Kerr (1999) 77 Cal.App.4th 87, 95, the appellate court observed in the context of permanent spousal support that "[g]enerally, the use of percentages to determine support will beneficially remove the need for further litigation and its attendant costs, and oftentimes, emotional upheaval."
The court held in Mosley that the trial court abused its discretion in requiring the husband to pay nearly 100 percent of his take-home pay in support payments, on the assumption, based on the past year, that he would receive a large bonus each subsequent year. (Mosley, supra, 165 Cal.App.4th at pp. 1386-1387.) This placed the husband in a position of having to borrow for his living expenses. The Mosley court thus reversed the support award and remanded the matter to the trial court with instructions to determine spousal support based solely on the husband's base salary, exclusive of a speculative bonus. The court further acknowledged that "any bonus actually received must be counted as part of [obligor's] annual gross income for the purposes of spousal and child support." (Id. at p. 1387.) The Mosley court therefore suggested fashioning an additional support award, "over and above the guideline support, expressed as a fraction or percentage of any discretionary bonus actually received." (Ibid.)
As explained in Mosley, "The trial court in In re Marriage of Ostler & Smith, supra, 223 Cal.App.3d 33, got it right when it stated: '"No future bonus is guaranteed. It would therefore not be appropriate to base a support order on Husband's bonus income and then require him to file motions to modify at such times as the bonus is reduced. It would be more fair to all parties to base the support order on Husband's income from salary . . . , and to allocate a portion of the future bonus income to the children and to Wife by way of a percentage interest so that future litigation will not be necessary as the bonus income changes."' [Citation.]" (Mosley, supra, 165 Cal.App.4th at p. 1387.)
As in Mosley, supra, 165 Cal.App.4th 1375, here, husband received a base salary as well as a fluctuating annual bonus. Husband's bonus fluctuated from around $35,000 in 2002, 2003, and 2004, to $50,000 in 2005, $100,000 in 2006, $110,000 in 2007, back to $100,000 in 2008, and $60,000 in 2009. Wife testified that husband received a bonus every year except the year his father died, which was not specified. Wife acknowledged husband's bonus fluctuated from year to year. According to husband's testimony, he did not always receive a bonus, although the past several years he received a bonus every year.
Despite significant fluctuations in husband's annual bonus, the trial court declined to order an Ostler percentage assessed over and above the guideline support for husband's annual bonuses. We conclude this was an abuse of discretion. Even though husband was president of Pacific States Utilities and may have determined the amount of bonuses distributed to company employees, including himself, there was undisputed testimony that husband's bonus fluctuated and that he did not have sole control over the amount and manner of distribution of company bonuses. Wife testified husband was required to inform the vice-president of the amounts to be distributed as bonuses and to obtain the vice-president's authorization. Wife also acknowledged that there was a maximum amount allotted for bonuses each year for distribution, which was not determined by husband. For instance, husband was authorized to divide up and distribute $200,000 in bonuses. According to wife, this amount differed each year and was based on the annual earnings of the company.
Furthermore, husband testified he does not own the company, it is not his business, and he does not have any ownership interest in the business. Although he is president of the company, he is an employee. Husband testified that the company's owner provided the family court with a letter stating that husband does not own the business. Wife did not provide any evidence refuting this. Furthermore, she testified that, after working for the company for 10 years, she was laid off in 2004 because "They sold the business."
Under these circumstances, in which husband received a fluctuating annual bonus which was dependent upon the company's annual profits and required authorization by another company officer, we conclude the trial court abused its discretion in declining husband's request for calculation of support based on an Ostler percentage assessed against husband's annual bonus.
IV
THE TRUCK AND FURNISHINGS
Husband contends the trial court abused its discretion in failing to impute a reasonable value to the parties' 2003 Ford truck and household furnishings. The statement of decision states the property has no value. Although we recognize there was minimal evidence as to the actual value of the truck and furnishings, we nevertheless conclude it was undisputed the property had value and there was sufficient evidence the property had value. It therefore was incumbent upon the trial court to place a reasonable value on the property, taking into consideration husband's unrefuted testimony regarding the condition and estimated value of the property.
As to the truck, husband testified the truck had been paid for in full, in cash, and wife was driving it. The truck had remained in wife's possession. Husband estimated the truck's value was $5,000 to $8,000.
As to the household furnishings, husband and wife testified husband did not take any of the furnishings, other than a few gardening items in the garage. The furnishings remained in wife's possession and were of good quality. The 2,200-square-foot family home was fully furnished. Husband estimated the value of the furnishings, including computers, to be $10,000 to $15,000.
We conclude husband established the 2003 Ford truck and furnishings had a value far greater than the value of "0" imputed by the trial court to the property. The matter is therefore remanded to the trial court for a determination of the fair and reasonable value of the truck and furnishings, and for an order either distributing equally the property or providing a credit of equivalent value to each party.
V
DISPOSITION
The judgment is reversed. The matter is remanded to the trial court for a revised award of permanent spousal support based on husband's fixed salary and for an additional award of permanent spousal support based on an assessed percentage of husband's fluctuating annual bonus, to be paid within a specified, reasonable period of time after husband's receipt of his bonus. The matter is further remanded for findings as to the reasonable value of the parties' 2003 Ford truck and household furnishings, with the property or its equivalent imputed value ordered distributed equally to each party. The parties are to bear their own costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Codrington
J.
We concur:
McKinster
Acting P.J.
Miller
J.