Holstrom, Block & Parke and Ronald B. Funk for Appellant. Ludwig Law Center, Eric S. Ludwig, Michelle P. Ludwig; Kevin B. Gibbs and Kevin B. Gibbs 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 14D003323) OPINION Appeal from a judgment of the Superior Court of Orange County, Franz E. Miller, Judge. Reversed and remanded. Holstrom, Block & Parke and Ronald B. Funk for Appellant. Ludwig Law Center, Eric S. Ludwig, Michelle P. Ludwig; Kevin B. Gibbs and Kevin B. Gibbs for Respondent.
Maria Flanders (wife) appeals from a family court judgment after trial. She contends the trial court abused its discretion by ignoring the res judicata effect of a prior order and imputing income to her. We determine the trial court acted within its discretion in imputing income to wife, but conclude the court's earning capacity figures were not supported by substantial evidence. We therefore reverse and remand for further proceedings on the issue.
Scott Flanders (husband) and his wife were married for nearly 14 years. During their marriage, husband's mother contributed financially to the couple. In early 2013, wife was laid off from her position as an administrative assistant. Sadly, in the fall of 2013, husband suffered a major stroke, which led to additional medical complications. His medical condition limited his ability to work.
In April 2014, husband filed a petition for dissolution of marriage. The parties stipulated to child and spousal support, among other orders. They also stipulated to a hearing to review the parties' income.
The review hearing was continued numerous times from June 2014 until August 2015. In March 2015, the trial court made temporary child and spousal support orders of $347 and $431, and continued the matter to June 2015. Again, the matter was continued several times.
At least one minute order identified the hearing as a "review hearing" continuance. Another minute order identified the hearing as a "review hearing" and a trial setting conference. In July 2015, the trial court identified issues for the review hearing as "child support, spousal support, modification of temporary order and calculation of the money from paternal grandmother for support."
The hearing resumed in July and August 2015. In February 2016, the trial court issued a lengthy ruling regarding temporary support orders, including an analysis of spousal support pursuant to Family Code section 4320.
In its ruling, the trial court determined husband's mother "insinuated herself into this marriage from inception, with financial gifts and control, and, that never abated, until the separation of the parties. At that time, she appears to have devoted her energies to stripping from her son's possession any sort of income that might stream to [wife] and/or the parties' minor son. She then, however, fully supported, and continues to fully support [husband], who lives with her. Thanks to her actions to protect [husband's] and her own fortune, she now has ensconced her son into her home as a pauper, yet, he lives a millionaire's life."
Ultimately, the trial court imputed husband's income based upon money he received from his mother. The court ordered spousal support in the amount of $1,276 per month until it was terminated on March 1, 2021 and stated "[t]his shall serve as the formal order of the [c]ourt." The findings and order after the hearing identified the spousal support awarded as temporary.
Trial in the matter started on August 1, 2016. After taking testimony over seven days, the court issued a ruling on August 10, 2016. The court noted "Prior rulings of the court pendent lite are not res judicata or collateral estoppel. The court is free to differ with the prior rulings. Usually, I think it's good for the court to pay attention to the prior rulings and, where possible, promote consistency in the law. [¶] But in this matter, I have significant different disagreement with the number of the findings from the prior hearing." The court exercised its discretion not to impute income to husband, with the exception of medical insurance costs paid for by his mother.
The trial court also made specific findings as it related to wife's imputation of income. The court determined wife had worked her way up in the company she was working for previously, with an ending income of $2,666 per month. The court stated wife left her job because "she needed to devote more time and attention to [the couples' minor son]. And then the other thing was what she wanted to do was pursue her aspirations to become a professor and writer of children's books." "I think it's notable that this is what she did, and I don't find any significant or credible evidence that this was involuntary at all. She entered into a stipulation where she was effectively directed to get a job. That was expected to happen within 90 days, and that did not happen. If anything, her direction has turned towards not getting a current job but to go for an aspiration that, with all due respect, I think is unrealistic."
The court imputed a monthly income of $2,666 to wife, based on what it deemed she was capable of earning during the marriage "very few years ago." At trial, wife's counsel questioned the imputed income figure, asking if the amount was "taking into account the fact that [wife] got let go of that job? She was laid off." The court stated "[e]ven if she was, I think she can make that much money. I have no problem. I heard her testify. I watched her demeanor. She's clearly a bright woman. And I just—I think it would have been in my discretion to impute more because I think she has the ability to do it. I easily think she has the ability to make the 2660 when she was making, layoff or not." The court did not award spousal support to either party, but reserved jurisdiction over the issue because the parties' marriage was of a long duration.
Wife contends the trial court abused its discretion in two ways: (1) by ignoring the res judicata effect of the prior court order, and (2) by imputing income to wife with no evidence she had the ability and opportunity to earn money at the rate imputed. We determine res judicata did not bar the court's judgment after trial. We conclude the trial court acted within its discretion in imputing income to wife, but find the court's earning capacity figures are not supported by substantial evidence. We therefore reverse and remand for further proceedings on the issue.
1. Res Judicata Did Not Bar Trial Court From Changing The Prior Spousal Support Order
California law provides for two different types of spousal support, temporary and permanent. (In re Marriage of Mendoza & Cuellar (2017) 14 Cal.App.5th 939, 942-943.) Temporary spousal support is intended to allow a spouse to live in the manner to which they were accustomed during the pendency of the dissolution. (In re Marriage of Dick (1993) 15 Cal.App.4th 144, 166.) Permanent spousal support, however, is designed "'"to make an equitable apportionment between the parties. . . ."'" (Ibid.) The standards for determining temporary versus permanent spousal support also differ. "The determination of permanent spousal support at trial must be de novo. Only at trial is all the evidence presented. The permanent order is to be based upon circumstances existing at trial, and a change of circumstances from the time of the [temporary] order is irrelevant to a determination of the amount of support which is 'just and reasonable' at that time." (In re Marriage of McNaughton (1983) 145 Cal.App.3d 845, 849.) Res judicata operates as a bar to relitigating an issue decided in a prior adjudication between the same parties. (In re Marriage of Buckley (1982) 133 Cal.App.3d 927, 935.)
Here, the trial court first issued a temporary spousal support award. The prior order is identified as temporary in several places in the record, including in the June 2016 findings and order after hearing. In fact, wife concedes in her opening brief on appeal, "[b]oth sides, at times[,] referred to the [prior] order as 'temporary' spousal support."
Wife argues that even if the prior order was identified as temporary, it was, in substance, a permanent order because the trial court analyzed section 4320 factors in its ruling. While section 4320 factors are generally not controlling on temporary spousal support awards, nothing prevents a court from considering the factors in making such an order. (In Marriage of Left (2012) 208 Cal.App.4th 1137, 1153, fn 11.) So while nothing prevented the trial court from analyzing the section 4320 factors in the temporary order, it was not binding on the trial court in determining permanent spousal support.
After the trial court issued the temporary spousal support order, it then conducted a multiday trial and issued a permanent spousal support order. The court identified the prior order as temporary, stating "I appreciate and agree that this is a trial matter. Prior rulings of the court pendent lite are not res judicata or collateral estoppel. The court is free to differ with the prior rulings." The court went on to analyze the case according to section 4320.
In sum, contrary to wife's contention, the temporary spousal support order was not binding on the court at trial. Thus, res judicata did not bar the court's judgment.
2. The Amount of Income Imputed to Wife Was Not Supported by Substantial Evidence
We review a trial court's decision to impute income for abuse of discretion. (In re Marriage of Schlafly (2007) 149 Cal.App.4th 747, 753.) "A trial court abuses its discretion when . . . its factual findings are not supported by substantial evidence." (Edwards Wildman Palmer LLP v. Superior Court (2014) 231 Cal.App.4th 1214, 1224.) The fundamental issue in this appeal is whether there is substantial evidence to support the court's findings that wife has the ability and opportunity to earn $2,666 per month.
The trial court has the discretion to impute income to an unemployed parent to determine that parent's support obligations. (§ 4320, subds. (a), (c).) Income may only be imputed to a parent who has "earning capacity." (State of Oregon v. Vargas (1999) 70 Cal.App.4th 1123, 1126.) "'"Earning capacity is composed of (1) the ability to work, including such factors as age, occupation, skills, education, health, background, work experience and qualifications; (2) the willingness to work exemplified through good faith efforts, due diligence and meaningful attempts to secure employment; and (3) an opportunity to work which means an employer who is willing to hire."'" (In re Marriage of LaBass & Munsee (1997) 56 Cal.App.4th 1331, 1337-1338.)
Trial courts may not draw the imputed income figure "from thin air; they must have some tangible evidentiary foundation." (In Marriage of Cohn (1998) 65 Cal.App.4th 923, 931.) The party seeking to impute income to the other party bears the initial burden to show the other party's ability and opportunity to work. (In re Marriage of McHugh (2014) 231 Cal.App.4th 1238, 1251.) After this initial burden is carried, "[t]he [party] to whom the income would be imputed bears the burden to show he or she could not secure the job despite reasonable efforts." (Ibid.) "[T]he burden of proof for imputation of income cannot be met by evidence establishing merely that a spouse continues to possesses the skills and qualifications that had made it possible to earn certain salary in the past—even where it was undisputed that the spouse had voluntarily left that prior position." (In re Marriage of Berger (2009) 170 Cal.App.4th 1070, 1079 (Berger).)
Here, the trial court did not abuse its discretion in determining some amount of income should be imputed to wife. The court noted she was physically able to work, had completed some college course work, and had a somewhat recent work history as an administrative assistant before she was laid off in 2013. The court also stated wife was "clearly a bright woman." Indeed, wife did not contest her ability or opportunity to work. She conceded she did not have any physical limitations on working as a receptionist or administrative assistant. So there was substantial evidence of wife's ability and opportunity to work.
The court erred, however, by calculating the amount of income imputed to wife. The court based the figure on the mere fact that she previously earned $2,666 per month at a job from which she was laid off. This figure was not supported by substantial evidence.
Berger is instructive. There, the husband voluntarily left his high paying employment. (Berger, supra, 170 Cal.App.4th. at p. 1079.) The husband was unable to return to the position. (Ibid.) The wife presented no evidence that he could earn that salary. (Ibid.) The trial court refused to impute income to the husband and the Court of Appeal affirmed. (Ibid.) "It is possible, certainly, that [the husband's] particular skills and experience would make it likely that he could earn similar sums in the future, but that probability must be evidenced, not merely suspected." (Ibid.)
Similarly, here, wife was involuntarily laid off from her prior position, to which she could not return. Husband presented no evidence that wife could currently earn the same salary. It follows the trial court erred by merely selecting wife's last, and highest, salary as her current earning potential.
This is unlike the situation in In re Marriage of Mosley (2008) 165 Cal.App.4th 1375 (Mosley). There, "the wife had a law degree from a prestigious school, where she had served as editor of the law review, and had worked for a very prestigious law firm prior to choosing to devote her full-time efforts to raising the couple's children. As of the time the parties divorced, she had not practiced law in nearly a decade." (Berger, supra, 170 Cal.App.4th at p. 1080.) "The court nonetheless concluded it was proper to impute income to her based upon her earning capacity. But the court did not decide it was proper to impute earnings based upon the mere fact the wife had once earned an income. Instead, what the court found to be sufficient was expert opinion evidence addressing the specific issue of her capacity to earn income in the future: As the court noted, '[the husband] provided a vocational evaluation summary demonstrating that [the wife] had a substantial earning capacity. He also provided the testimony of the vocational expert who had prepared the summary, and who had interviewed [the wife] as part of the evaluation process. The vocational expert testified that [the wife], as an attorney, had an approximate earning capacity of $95,000 per year to start, although it might take her about 26 weeks to find a position. He also testified that [the wife] could earn $16 to $20 per hour as a paralegal.' [Citation.] That type of evidence, demonstrating an analysis of the spouse's qualifications, as well as the opportunities currently available in the job market, is a far cry from evidence merely establishing that the spouse had once earned a certain salary, and thus presumably could again." (Ibid.)
Unlike Mosley, here, the only evidence husband presented to the trial court was that wife had, at one point, earned a certain salary. There was no expert testimony, vocational report, or other analysis of wife's earning capacity at the time of trial. Husband did not present evidence as to what someone with wife's experience and training could earn in a particular position. The only evidence relied upon by the trial court in imputing income to wife was the fact that she earned $2,666 per month in her previous position. This was error.
We reverse the court's judgment imputing income of $2,666 per month to wife. We remand the matter for a recalculation of support. Upon remand, the parties should be given an opportunity to present evidence concerning wife's earning capacity. Once this evidence is presented, the trial court can make proper findings to support a legitimate amount of income to impute to wife. Wife is entitled to costs on appeal.
THOMPSON, J. WE CONCUR: BEDSWORTH, ACTING P. J. MOORE, J.