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California Family Law Report

 

Case of the Month Archive

May 2017

High earner has burden of showing that guideline would be unjust or inappropriate . . .

 

In reversal, Second District holds that the trial court must, per Fam C §4056, state on the record its reasons for deviating from guideline child support; concluding that guideline support would exceed the child’s reasonable needs without finding of why it was in child’s best interests was error.

 

Y.R. v. A.F.

(February 24, 2017; ordered published March 15, 2017)

California Court of Appeal 2 Civil B266621 (Div 4) 9 Cal.App.5 th 974, 215 Cal.Rptr.3d 577, 2017 FA 1781, per Manella, J (Epstein, PJ and Willhite, J, concurring). Los Angeles County: Silverman, J, reversed and remanded with directions. For appellant: Christopher Melcher, CFLS, (818) 591-3700. For respondent: J. Nicholas Cuneo, (310) 442-9945. CFLP §E.22.8.12.

 

After a brief affair, Y.R. discovered that she was pregnant with A.F.’s child. She gave birth to their daughter, Z., in July 2006. A.F., a successful director with a wife and three kids, paid some of Y.R. and Z.’s expenses, and gave Y.R. $5,000 a month. Y.R., a hair stylist, did not seek a formal child support order until October 2014. In her petition, Y.R. sought an order establishing A.F.’s paternity and requiring him to pay Z.’s health insurance, uninsured health care expenses, and half of Z.’s expenses for extracurricular activities.

 

Once her petition was filed, Y.R. sought discovery regarding A.F.’s income and expenses, lifestyle, current housing, family vacations, and the cost of his other children’s tuition, extracurricular activities and medical insurance. In response, A.F. stated that he was an extraordinarily high income earner, per Fam C §4057, and could pay any child support order commensurate with Z.’s reasonable needs. Instead of responding to the discovery requests, A.F. provided a declaration, listing his salary at $2.2 million annually or $190,000 per month. Y.R.’s attorney subsequently obtained further information regarding A.F.’s personal finances, and did not request an order compelling further responses. In her declaration, Y.R. described living in a 3-bedroom, 2 bath apartment in Santa Monica, which was “ ‘cramped’ ” because her two other children lived there too. She contended that she should be able to have a 4-bedroom condo in the same area at a monthly rental of between $6,000 and $15,000 a month. She also asserted that Z. should have a nanny, receive tutoring, take various lessons, and go to camp. Meanwhile, she reported, her monthly income was $1,833 and her expenses were more than $6,000.

 

In response, A.F. reported an annual salary of a little more than $2 million, monthly rent of $20,000, more than $3,000 a month each for various living expenses, such as groceries, clothes, education expenses for his other kids, and entertainment and vacations. In addition, A.F. stated, he paid a total of $31,000 a month for other expenses. He submitted a DissoMaster report, calculating guideline support at $11,840 a month. However, A.F. argued that ordering that amount would exceed Y.R. and Z.’s stated expenses, and he urged the trial court to order less than guideline support. He did not discuss his lifestyle, or calculate reasonable support based on his monthly income and expenses. Y.R. disputed the amount of income A.F. reported and her accounting expert calculated A.F.’s average income at $336,000 a month, for a guideline support order of $25,000 a month.

 

After a hearing, the trial court found that A.F. was an extraordinarily high wage earner, but his income and expenses report was unsubstantiated. Focusing on Y.R.’s income and expenses, the lower court found that guideline support would exceed Z.’s needs. The trial court then ordered A.F. to pay Z.’s school tuition, 75% of her extracurricular activities and school expenses, all of Z.’s health insurance, and 90% of her uncovered medical expenses. The court also ordered A.F. to pay child support of $8,500 a month as a reasonable amount to allow Z. to live at an appropriate standard. When Y.R.’s attorney objected that Y.R. and Z.’s past expenses were not commensurate with Z.’s current needs, the trial court disagreed, saying that Y.R. had the burden of showing that her daughter’s reasonable needs would not be met by the order. The trial court’s final order contained the income and expense figures on which it had relied, but did not explain its reasons for deviating from guideline or state why the award was in Z.’s best interests.

 

Y.R. appealed, and the Second District reversed and remanded with directions.

 

No rhyme or reasons . . .
Y.R. contended that the trial court failed to comply with Fam C §4056(a) requirements for deviating from guideline because it failed to state its reasons for doing so orally or in its order. The justices agreed. They noted that this requirement is necessary to comply with federal law regarding child support guidelines, and, per Rojas v. Mitchell (1996) 50 Cal.App.4 th 1445, 58 Cal.Rptr.2d 354, 1997 CFLR 7360, 1996 FA 779, a trial court’s failure to comply with the requirements constitutes grounds for reversal and remand for compliance. Here, although the trial court had calculated guideline support at $25,325 a month, it awarded only $8,500, a significant difference for which it failed to state its reasons or why the lesser amount would be in Z.’s best interests. Accordingly, the justices concluded, the order must be reversed.

 

Be careful what you ask for . . .
A.F. asserted that the necessary findings could be discerned from the record. Not so, the justices found. They reasoned that the lower court’s comments not only failed to “supply the missing rationale[,] if anything, they support an alternative ground for reversal.” Instead of measuring Z.’s needs by A.F.’s disposable income and standard of living, the trial court relied on Y.R.’s income and expense declaration. The panel pointed out that where a high earner is involved, the child’s needs should not be measured by “ ‘historic expenses’ ” but by the parents’ current station in life. Z. was entitled to an amount of support that enabled her to approximate the lifestyle enjoyed by A.F., not an award that did little more than maintain the status quo. A.F argued that making a higher award would mean that he was improving the standard of living of Y.R.’s other kids, not just Z. The justices noted that per Fam C §4053(f), such an improvement is not inappropriate and is frequently the result on facts like these.

 

Where it belongs . . .
Finally, Y.R. contended that the lower court erred by putting the burden on her to show that a guideline order would be appropriate. Again, the justices agreed. They found that the lower court should have put the burden on A.F. to show that guideline would be unjust and inappropriate. Summing up, the justices reversed the child support order and remanded for the trial court to assess whether a guideline support order would exceed Z.’s needs and if so, to state in writing or on the record the reasons why the child support order should differ from guideline and is consistent with Z.’s best interests.

 

 

Comment

  

Payors with extraordinarily high incomes routinely seek to protect their finances from discovery requests by filing declarations like the one here, which admit high earner status and concede their ability to pay any amount of child support commensurate with the child’s needs. More recent cases, however, have given only limited protection from discovery, finding that such financial information is relevant to the needs of the children and protecting the information only from detailed requests that would prove unnecessarily burdensome and oppressive. In a footnote, the justices tell us that Y.R.’s attorney “threatened to file a motion to compel and participated in a meet and confer” with opposing counsel, where they apparently agreed on the things that A.F. would produce. As a result, A.F. provided company profit and loss statements, two years’ worth of personal profit and loss statements, cancelled checks, and tax returns. Having been given that information, the justices tell us, Y.R. “no longer disputes that [A.F.’s] income falls within the extraordinarily high income category.” No surprise there. What is surprising is that trial courts are still failing to give the statutorily required reasons for deviating from guideline support either in writing or on the record. The issue arises routinely and the statute is clear, yet cases like this one still come down.

 

 

Finally, we get some insight into the state of the relationship between A.F. and Z. In a footnote, the panel says that the parties have stipulated that he was to have no custody or visitation rights.

 

 

 
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