Marriage of Cadoux
Filed 8/22/07 Marriage of Cadoux CA1/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
In re the Marriage of JEANPIERRE and ROSIE McKINNEY CADOUX.
ROSIE McKINNEY CADOUX,
Super. Ct. No. FL060089)
Jeanpierre Cadoux appeals an order directing him to pay child support. He argues that the child support is excessive because income was improperly imputed to him. We find no abuse of discretion and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The parties were married in January 1989, and separated in May 2001. Their child, Danica, was born in October 1989. Father says that he agreed to pay Mother $1,000 per month for child support at the time of separation, but concedes [t]here is no specific evidence in the record supporting this fact. Mother filed a petition to dissolve the marriage in January 2006, and the Marin County Department of Child Support Services (the Department) filed an order to show cause to establish guideline child support that same month. The matter was heard in May 2006. In its statement of decision, the court remarked that it was called upon to determine . . . Fathers income, as a principal ingredient in calculating guideline child support, in the face of financial information provided by Father that does not appear to be supported by the facts or the evidence.
Father is an auto mechanic, who was self-employed and doing business as A-1 Imports until he incorporated his business as A-1 Imports Autoworks, Incorporated in 2005. Father testified he was an officer of the corporation and its principal owner, but claimed he was an independent contractor rather than a corporate employee.
Father provided proof of his earnings through tax returns filed for 2003 and 2004, and from assorted business records from 2005. Fathers 2003 individual federal tax return showed total gross receipts for his business of $387,371 and cost of goods sold of $193,198, leaving a gross profit of $194,173. His business related expenses also totaled $194,173, resulting in no net profit for his business, and no tax liability. When the court asked how Father met his personal expenses for housing, food, and transportation in 2003, when every penny of total gross receipts w[as] ostensibly committed for business expenses, Father was unable to provide any reasonable explanation.
Fathers 2004 individual federal tax return showed total gross receipts for his business of $403,171 and cost of goods sold of $300,315, for a gross profit of $102,856. But his business related expenses for 2004 exceeded his gross profit, once again leaving Father with over 100% overhead, zero net profit, and no tax liability. The court concluded from these tax returns that [either] there was a source to pay for [Fathers day-to-day] expenses which has not been disclosed, or his 2003 and 2004 tax returns, which he signed under penalty of perjury, do not accurately reflect his actual financial condition or the facts.
Although neither Father nor the corporation had filed a 2005 tax return at the time of the superior court hearing, Father produced a three-line gross profit and loss statement for 2005 that showed gross receipts of $984,215, expenses of $1,019,557, and a net operating loss of $35,342. Father also provided a purported accounting of his wages from April 2005 through March 2006 that reflected he was paid an average of $5,764.17 per month by the corporation. Fathers April 2006 income and expense declaration claimed average monthly income of $5,139, which the court determined was inconsistent with his wage records. The court observed: As with his tax returns, Fathers figures make little sense and these glaring inconsistencies were not reasonably or otherwise reconciled or explained. Fathers fallback position was that he leaves financial matters to his bookkeeper or accountant and knows really nothing about the subject. In [the] Courts view, that [was] no answer at all.
Fathers April 2006 income and expense declaration also claimed that Father had fixed and recurring monthly expenses of $6,774, and there was no showing of how [the] shortfall [between monthly income and expenses] is met . . . . The court viewed this discrepancy as yet another of the mysteries surrounding Fathers arithmetic. The court concluded: If Fathers 2003 and 2004 tax returns and his Wages information are taken at face value, the indisputable conclusion is that Father had not one penny in 2003 or 2004 to meet any of his personal expenses, including his basic needs of housing and food, and that in 2005, his earnings were insufficient to meet his claimed expenses. That is especially so as Father . . . stated that except for a gasoline credit card issued to the corporation to pay Fathers gasoline expense, the corporation pays none of his personal expenses. The court therefore reject[ed] the proffer by Father that his financials are as they appear on paper.
The court determined that Fathers income, as an ingredient of guideline child support, may be based upon his fixed and recurring expenses which he claims to be $6,774 each month and which he is apparently meeting. Father also testified that he borrowed $100,000 from his best friend and used the loan to pay business expenses. Father said that he had repaid about $40,000 of the loan, during a time that his tax returns showed no personal funds available. Father does not cite to any documentary evidence of the loan or his obligation to repay it. Nevertheless, Father testified he repaid $40,000 of the loan, and the court reasonably assumed that he repaid it over the previous 24 months, that represents $1,667 per month in additional funds to which Father had access and should likewise be attributed to him for guideline child support calculation purposes. The court therefore set Fathers income at $8,441 per month, and ordered Father to pay Mother guideline child support of $1,626 per month, effective February 1, 2006. Father timely appealed.
A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) We review the record to determine whether there is any substantial evidence to support the trial courts findings, and have no power to judge the weight of the evidence or the credibility of the witnesses. (In re Marriage of Chandler (1997) 60 Cal.App.4th 124, 128; In re Marriage of Martin (1991) 229 Cal.App.3d 1196, 1200.) The burden is on appellant to establish an abuse of discretion. (In re Marriage of Martin, supra, at p. 1200.) The showing on appeal is insufficient if it presents a state of facts which simply affords an opportunity for a difference of opinion. (In re Marriage of Rosevear (1998) 65 Cal.App.4th 673, 682.) The trial courts exercise of discretion will not be disturbed on appeal in the absence of a clear showing of abuse, resulting in injury sufficiently grave as to amount to a manifest miscarriage of justice. (Ibid.)
Father argues that the trial courts assessment that his financial disclosures were not credible was due to its misunderstanding of his 2003 tax returns. But Fathers argument is not supported by the record, which demonstrates that the trial court carefully reviewed all of Fathers financial documents. Father seeks to distinguish the cases cited by the court in its ruling by arguing that they involved evidence of loan applications submitted by fathers that showed higher monthly income than reflected in their tax returns,declarations or testimony. (See In re Marriage of Calcaterra & Badaksh (2005) 132 Cal.App.4th 28, 34-35; In re Marriage of Chakko (2004) 115 Cal.App.4th 104, 109.) But we do not read those cases so narrowly. We agree with the trial court that their persuasiveness is not tied precisely to their underlying facts, and they support the courts finding here that Father had undisclosed sources of income, based on his April 2006 income and expense declaration. (See County of Orange v. Smith (2005) 132 Cal.App.4th 1434, 1446 [presumption that income as shown on tax returns is correct may be rebutted by evidence showing unreported income]; In re Marriage of Calcaterra & Badakhsh, supra, at pp. 34-35 [trial court was not required to accept statement of income on tax returns in view of discrepancy between those documents and other evidence]; In re Marriage of Chakko, supra, at p. 109 [appellate court will not reweigh evidence, and single document may constitute substantial evidence of partys income]; see also Fam. Code, 4058, subd. (a) [annual gross income of each parent means income from whatever source derived [with certain exceptions not relevant here]].)
Father summarily asserts the courts imputation of income to him was incorrect because [m]any people spend more than they make, but he fails to cite any evidence in the record to support the conclusion that he is such a person. Father testified that he simply wrote himself a check from his business account whenever he needed money. This practice, he argues, reflects his true income. But when the trial court pointed out during the hearing that Father couldnt possibly have done that based upon [the tax return] figures and theres no money left down here for you to . . . take out of the account, Father had no effective response. He argues here, the court simply did not understand. (See Strohm v. Strohm (1960) 182 Cal.App.2d 53, 60 [[t]he court was not required to rely naively on the testimony of defendant or on the designation of the sums received as loans on the corporate books which were in his joint control to determine his means or his capacity to acquire the means to pay the amounts ordered].) It was not an abuse of discretion on this record for the court to conclude Fathers monthly income at least met his stated expenses of $6,774.
Nor do we believe the trial court abused its discretion when it imputed to Fathers income the amounts of the loan from his best friend that he repaid over the 24 months prior to the hearing. (See In re Marriage of Kirk (1990) 217 Cal.App.3d 597, 606-607 [partys voluntary diversion of income to pay debt could be considered by the court in determining that partys income for child support purposes].) Father testified that he thought he received the $100,000 loan in 2003, but did not specify the month. When asked how much was currently owed on the loan, he replied, [u]m, I believe I want to say Im not sure but I think about $60,000. When Father testified the repayment was made by the business, the court asked him to explain how a business with no income had generated $40,000 to pay back the loan from Fathers friend. Fathers counsel responded: Your Honor, I only have anecdotal evidence, but I fired an accountant for doing pretty much the same sort of thing. Because I never . . . checked the figures.
Father attempted to call his bookkeeper as a witness at the support hearing. The bookkeeper was not listed by Father as an anticipated witness. After the court considered Fathers offer of proof regarding her anticipated testimony, the court disallowed the bookkeeper as a witness. Father argues the ruling barring her testimony resulted in a miscarriage of justice. But the court had plenty of reasons to disallow the bookkeepers testimony. While the bookkeeper may have had knowledge of the  profit and loss [figures], Fathers counsel acknowledged that the bookkeeper did not prepare Fathers taxes and had no knowledge of his tax returns. Moreover, she only started working for Father in 2005, and was unable to say anything about his 2003 or 2004 earnings. No sworn declaration or affidavit by the bookkeeper appears in the record, and Father acknowledges that local rules and the California Rules of Court favor testimony by declaration or affidavit . . . . She was an undisclosed witness who did not appear to have much to say.
Father relies upon the decision of Kelly v. New West Federal Savings (1996) 49 Cal.App.4th 659, 672, to argue it was improper for the court to exclude his bookkeepers testimony. But his reliance is misplaced. Kelly involved a situation where parties were precluded from testifying to certain facts because their testimony would have been different from their discovery responses relating to those same facts. That is not what happened here. In this case, the court declined to allow Fathers bookkeeper to testify because she was an undisclosed witness with very limited knowledge of relevant facts. Father has shown neither that the court erred in excluding the testimony of his bookkeeper, nor that he was prejudiced by the courts ruling. (See Evid. Code, 354; see also People v. Schmies (1996) 44 Cal.App.4th 38, 53 [an offer of proof . . . must set forth the actual evidence to be produced and not merely the facts or issues to be addressed and argued]; In re Marriage of Stevenot (1984) 154 Cal.App.3d 1051, 1059 & fn. 3 [the trial judge [is] the only one in the courtroom who knows what information in addition to the declarations is required to reach a decision].)
Fathers argument that the courts child support order constituted a de facto discovery sanction is also without merit. (Cf. In re Marriage of Loh (2001) 93 Cal.App.4th 325, 327, 329-331 [order modifying child support after father failed to produce stipulated documents could not be sustained as a discovery sanction in the absence of any motions to compel].) The statement of decision instead demonstrates that the court determined Fathers income on the basis of the evidence and set guideline child support. (See County of Orange v. Smith, supra, 132 Cal.App.4th at p. 1446 [In order to apply the guidelines, one must ascertain the income of the parents].) The support order was not entered as a discovery sanction and was not an abuse of discretion.
The ruling of the trial court is affirmed.
Pollak, Acting P.J.
Publication courtesy of California pro bono legal advice.
Analysis and review provided by La Mesa Property line attorney.
 Danica was approximately 16-1/2 years old at the time the court made the child support order here under review.
 The Departments May 2006 cover sheet stated that Fathers 2005 gross profit and loss statement was essentially useless since it does not provide a line itemization of business expenses and only reports gross amounts, and concluded there are numerous questions regarding Fathers actual compensation received from his association with A-1 Import Autoworks, Inc. that unfortunately cannot be answered by the documentation Father has provided thus far.
 Father testified, for example, that repair invoices were prepared by service writers and delivered to the bookkeeper, whose figures he did not check. Father stated he had really . . . never done taxes, and simply signed the tax returns prepared by his accountant as directed by a little sticky, and returned them through the mail.
 The Department argues that Fathers expenses are actually at least $7,774 per month because Fathers stated expenses do not include the $1,000 monthly child support he paid voluntarily.
 The court concluded Father borrowed the money in 2004, but Father testified he thought the loan was made in 2003.
 The court adopted the Departments calculation of Mothers income at $2,366 per month, which is not disputed on appeal.
 In April 2007, this court granted the Departments unopposed motion to augment the record with documents including a February 2006 income and expense declaration by Father showing average monthly income of $6,000 and total monthly expenses of $6,774.
 Fathers April 2006 income and expense declaration states that he makes monthly payments of $1,365 for [d]ebt consolidation, but does not indicate the source or nature of that debt. Additional payments of $330 per month are attributed to credit card and motorcycle financing.
 Father identified the loan as a business loan, but also testified it was a personal loan to the business. On appeal he maintains there would be very little distinction between whether this was a personal loan or a business loan when he was doing business as a sole proprietorship, but that [p]resumably, Father transferred all of the assets and all of the debts from his sole proprietorship to the corporation at formation[, and a]s such, for the 17 months preceding the hearing, this was a debt of the corporation, not a personal debt of Fathers . . . . Fathers financial documents contained a March 2006 check stub showing a $2,275 payment to Fathers best friend, annotated (for J P Cadoux) owner draw.
 Father claims that he proffered the testimony of his bookkeeper [a]s a result of documents filed by [the Department] 2 days prior to the hearing which raised new issues, but he does not specify what those new issues were or why they required the testimony of a previously undisclosed witness.
 Fathers counsel also claimed the check stubs Father provided were in [the bookkeepers] handwriting, and that she would testify that she makes the decisions on how much he should get based on what is available. The court noted the documents in question showed Father was generally paid $1,500 per week.
 Father had a different bookkeeper in 2003 and 2004 who worked for him for nine years, but he could not remember her name when he testified.
 Father himself acknowledges in his opening brief that [t]here have been no discovery motions or orders.
*Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.