Marriage of Venit
Filed 7/16/07 Marriage of Venit CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
SECOND APPELLATE DISTRICT
In re Marriage of JAMI and ADAM VENIT.
B185306 (Consolidated with B186728)
(Los Angeles County
Super. Ct. No. BD279330)
APPEAL from an order of the Superior Court of Los Angeles County, Marjorie Steinberg, Judge. Affirmed.
Law Offices of Vicki J. Greene, Vicki J. Greene for Appellant.
Nachshin & Weston, Scott N. Weston; De Goff and Sherman, Richard Sherman, and Victoria J. De Goff, for Respondent.
This is a consolidated appeal by Adam Venit from post-dissolution child support and litigation costs orders in favor of his former spouse Jami Abell-Venit entered by Judge Marjorie Steinberg. First, Adam challenges the July 15, 2005 denial of his application to modify a November 8, 2002 child support order to reduce his child support payments for his two children from $26,971 per month, which he was ordered to pay pursuant to the statewide uniform child support guideline formula set forth in Family Code sections 4050 et seq., to $12,000. Second, Adam challenges that portion of the July 15, 2005 order which increased his child support payments to $31,603 per month pursuant to the statutory guideline support formula based on his annual income of $4,082,424. Third, Adam also appeals from an August 22, 2005 order directing him to pay $246,268.54 of litigation costs to Jami in connection with the July 15, 2005 order, among other things. Under the applicable standards of review Judge Steinberg did not abuse her discretion in: denying the request to reduce the support order from $26,971; increasing the amount of monthly support to $31,603 based on the escalation in Adams annual income from $3.6 million in 2002 to $4,082,424 in 2005; and ordering Adam to pay most of Jamis litigation costs.
A. The January 25, 1999 Judgment
At the time a dissolution judgment was entered on January 25, 1999, Adam and Jami had six-year-old twins, Sarah and Michael. Adam owned an 11 percent share of the Endeavor Talent Agency. In 1999, his yearly income was about $1,110,000. As part of the dissolution judgment, Adam received his 11 percent interest in the Endeavor Talent Agency. Jami received the family home in Encino which was encumbered by a $510,000 mortgage. The parties agreed that Adam would pay a total of $5,020 in monthly child support for the twins plus an additional amount if he received a bonus. The parties also agreed that Jami would receive spousal support payments until September 15, 2002.
B. The November 8, 2002 Child Support Order
On August 28, 2001, Jami filed an order to show cause seeking an increase in child support. Jami argued that there was a great disparity in the lifestyle the twins had with her compared to the lifestyle they had with Adam. On November 8, 2002, Judge Lee Edmon ordered the child support payments increased to the guideline support amount of $13,485 per month per child for a total of $26,971 per month retroactive to September 1, 2001.
In a statement of decision dated December 4, 2002, Judge Edmon ruled: the childrens reasonable needs were not currently being met by the existing January 25, 1999 child support order; Adams income had increased from $1.1 million to over $3.6 million since the January 25, 1999 support order; there was a great disparity in the lifestyle that the children were able to enjoy with Adam; and Adam had failed to establish the uniform child support guideline should not be followed. Judge Edmonds December 4, 2002 statement of decision states: The Court finds it is appropriate to apply in this case the well-established principles (1) that the childs need is measured by the parents current station in life, (2) that where the child has a wealthy parent that child is entitled to and therefore needs something more than the bare necessities of life, (3) that where the supporting parent enjoys a lifestyle that far exceeds that of the supported parent, child support must reflect the more opulent lifestyle even though it may benefit the supporting parent[,] and (4) that child support may appropriately improve the standard of living of the supported parent to improve the lives of the children. ([Fam. Code, 4053 subds. (a) & (f); In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 293-294; In re Marriage of Chandler (1997) 60 Cal.App.4th 124, 129; In re Marriage of Catalano (1988) 204 Cal.App.3d 543, 552].) In addition, Judge Edmon ruled that Adam failed to demonstrate that it was in the childrens best interests to impute income to Jami for purposes of determining the child support level.
C. The July 15, 2005 Child Support Order
Adam did not appeal from the November 8, 2002 child support order. Rather, on December 30, 2004, Adam filed an order to show cause for modification of child support. Adam asserted Jami had misrepresented to Judge Edmon a need for more child support so the twins could receive a more comparable lifestyle to the one provided for them by Adam. Also, Adam disagreed with the manner in which Jami conducted her financial affairs. The order to show cause alleged that: Adam and Jami share joint equal legal and physical custody; Adam is now married to Trina Venit; and they live with Trinas daughter and their two children, Olivia and Matthew. Jami is married to Patrick Patterson, who is employed by the Los Angeles Fire Department. Patrick and Jami live with his two minor children and the twins. Adam argued the child support should be reduced to $6,000 per month for the twins because: Jami was misusing the child support; Jami was receiving more child support than she reasonably needed and was supporting her new husband and his children; and Jami had failed to return to gainful employment to contribute to the twins or her own expenses.
In support of his request to modify the child support order to reduce his payments to $12,000 per month, Adam filed the declaration of Susan Miller. Ms. Miller, a vocational counselor, interviewed Jami in November 2001 and prepared a report in December 2001. Ms. Miller believed Jami could obtain employment as an event planner with an earning capacity of $55,000 to $60,000 per year. Ms. Millers opinion was based on the 2001 data as well as market conditions. At the March 23, 2005 hearing, Judge Steinberg noted that Ms. Millers declaration was predicated on an interview which was conducted several years earlier. Judge Steinberg explained the issue of Jamis employment was being raised in a backhanded context because Judge Edmon had previously considered the issue. Adams counsel, Vicki Greene, then argued that the purpose of Ms. Millers declaration was to establish that Jami should be working. Rather, according to Ms. Greene, Adam was not asserting that income should be imputed to Jami. This was because, even if $50,000 income were imputed to her, it would not affect the guideline amount by more than $300 or $400. Judge Steinberg ruled Ms. Millers declaration was irrelevant.
Also in support of his order to show cause, Adam detailed instances of personal animosity. Adam complained that Jami and her new husband gave generous contributions to the Stephen S. Wise elementary school where the twins as well as Patricks children attend. According to Adam, Patricks children attended the school even though they are not Jewish. Adam believed the support payments were paying for Jami and Patrick to enjoy a generous lifestyle. Adam declared: I believe I got hit very hard by the Court in 2002, too hard. The Court ordered me to pay child support of more than $26,000 per month. In addition, I pay one-half of our childrens private schooling, medical, etc. . . . It is just that [Jami] convinced the Court that she needed more money to buy a new house, join a country club, travel, etc. My income also had increased dramatically, from about $1 million (which was the highest year of my marital income and in the last year of our marriage) to more that $3.6 million gross per year. According to Adam, Jami did not do what she said that she would do if the money were awarded to her. As previously noted, Adam did not appeal from the November 8, 2002 order directing he pay $26,971 per month.
Adam reiterated that he did not want to have the funds paid for support to benefit Jami and her new family. Adam admitted he had purchased a new home in Beverly Hills but stated he had earned the right to do so. According to Adam, Jami wanted to have, but was not entitled to share, the same lifestyle that he was accustomed to having. Because Jami did not actually purchase a new home and take the twins on vacations other than to Hawaii, Adam claimed that his support obligation should be reduced. Adam further anticipated that his income was likely to increase even more in the future but believed that his earning capacity should not require him to pay more support. Adam believed that Jami refinanced her home so that she could save some of the child support for the time when it terminates.
Adam also attached the declaration of certified public accountant David J. Swan in support of the order to show cause. Mr. Swan declared that, based on Jamis financial records, she had spent only an average of $14,388 per month on the twins for the past 20 months. Mr. Swan concluded: The present child support order appears to exceed the needs of the supported children even when 100% of the residence expenses are attributed to them. Furthermore, the present order exceeds the $24,396 adjusted average monthly living expenses of [Jamis] entire household, and it appears that [Jamis] husband contributes a minimal amount toward the household operating expenses.
In response to the order to show cause, Jami argued Adam had failed to establish a material change of circumstances between the existing November 8, 2002 order and the current order to show cause filed on December 30, 2004 to justify a reduction in child support. Rather, Jami argued the only change in circumstances justified an increase in the amount of child support. Jami cited evidence that: since the November 8, 2002 child support order was entered, Adams income was substantially higher; his standard of living had greatly increased; and Jamis standard of living had increased since the November 8, 2002 order. Jami further argued: that the issues raised by Adam did not establish a material change in circumstances; the issue concerning disguised spousal support had been raised, litigated, and adjudicated against Adam by Judge Edmon in 2002; and Judge Steinberg should focus on Adams ability to pay and his standard of living.
Jami declared that she had spent the child support for the benefit of her children. As they grew older, their expenses increased. Adam had enhanced the quality of his lifestyle by doubling the size of his home, taking the children on lavish Hawaii vacations, and driving the twins around in new extravagant vehicles. Even with the increase in child support since the November 8, 2002 order, there remained a huge disparity between the lifestyle the children had with their mother and the one they had with their father. According to Jami, the children commented on the disparity. Michael, one of the twins, stated the mother only drives an Escalade while their father drives a Rolls Royce. Michael also stated that Adams backyard is as big as a football field. Michael explained that it is so much bigger than Jamis backyard. Sarah wanted her soccer friends to go to her fathers home to see how cool it was. Both twins stated that they wanted gates around Jamis property because they live in a gated community with their father. They said they would feel much safer with a gate. In 2003, Adam sold his 5,500 square foot home in Encino and purchased an 11,000 square foot Beverly Hills estate. Adam also acquired the lots across the street and below the main house. The twins each have their own bedroom and own bathroom at their fathers home.
Jami declared that she did not separate any of her income from all sources including child support payments. She also received court ordered monthly payments to reimburse her for: attorney fees; accounting fees; child and spousal support arrears; and child related reimbursements. Jami did not actually receive a child support payment of $26,971 from Adam until August 2004.
Jami married Mr. Patterson in 2003. Mr. Patterson and his two children live in her house. According to Jami, she pays all the household expenses because it is her house. Mr. Patterson, who is a firefighter, contributes $1,000 per month to a joint account. Mr. Patterson gives Jami $600 a month in cash. Mr. Patterson usually pays for the family meals when they go out to dinner. He pays for the lease on a Mercedes and groceries for the entire family. Mr. Patterson pays for his and his childrens share of family vacations.
Jami also disputed Mr. Swans professional opinion that her household living expenses were only $24,396. Jami presented evidence that the household expenses were $44,436. Andrew Hunt, a certified public accountant, explained Mr. Swans opinion failed to include all expenses and deductions. Mr. Hunt declared Mr. Swan did not utilize general ledgers which contained Jamis actual 2004 expenditures. Nor, according to Mr. Hunt, did Mr. Swan include expenditures from bank accounts. Mr. Hunt compared actual general ledgers and Jamis bank statements for the year 2004. Mr. Hunt concluded that Mr. Swan had not included about $325,000 in expenses. Mr. Hunt concluded that the twins total living expenses are $29,521 per month. Mr. Hunt concluded that Adams living expenses were $84,707 per month. Yet, according to Mr. Hunt, Adams controllable cash flow is $339,500 per month.
Mr. Hunt prepared exhibit No. 9 which showed that Jami had received child support totaling $647,305 plus $515,485 in other payments for the years 2003 and 2004. The $515,485 included payments from Adam of: $171,400 for reimbursement of legal fees; $119,031 for child support arrearages; and $9,851 in other reimbursements. The remaining $215,203 came from the following sources: $115,597 from loans; $21,572 from Mr. Patterson; $43,917 in tax refunds; $20,657 in dividend income; and $3,333 in other income.
Jami also submitted as exhibit No. 23, a calendar which summarized the time the parties spent with the twins. She declared that she kept a contemporaneous calendar of the time she spent with the twins over the two-year period between 2003 and 2004. Jami calculated the twins spent 57 percent of their time with her. The twins spent 41 percent of their time with Adam.
In reply, Adam submitted, among other things, a new declaration by Mr. Swan. In the new declaration, Mr. Swan admitted that his former analysis was incomplete. Mr. Swan analyzed in depth the living expenses of Jami, the twins, and the extended family. In Mr. Swans opinion, even when 100 percent of the residence expenses are attributed to the twins, the child support order exceeded the needs of the supported children by a wide margin. Mr. Swan estimated that, if 100 percent of the residence expenses are attributed to the twins, the total expenditures per month were $17,965.
After the hearing, Judge Steinberg took the matter under submission and on May 13, 2005 issued a tentative statement of decision and factual findings. We set forth in depth Judge Steinbergs findings because of the issues raised by Adam in this appeal. The decision provides: 1 [Jami] Has Demonstrated a Material Change of Circumstances Which Justifies A Change in Child Support. The Court finds that Petitioner has met her burden of proof of demonstrating by a preponderance of the evidence and as a matter of law that there has been a material change of circumstances since the order on Order to Show Cause Modifying Judgment of Dissolution was entered November 8, 2002 (Amended Judgment), which justifies a change in the amount of Guideline Child Support, namely:  (A) [Adams] net disposable income has increased from $169,308 or $2,031,696 per year at the time of the Amended Judgment to $193,850 per month or $2,326,200 per year currently; and  (B) The approximate percentage of time [Adam] has actual primary physical responsibility for the minor children has decreased from 44% at the time of the Amended Judgment to 42% currently, with [Jamis] time increasing from 56% to 58%.  2. Guideline Child Support. The Court makes the following factual and evidentiary findings in support of its determination of the amount of current Guideline Child Support for the twin children of the marriage, Michael and Sarah Venit, . . .  (A) The amount of child support under the Statewide Uniform Child Support Guideline formula is $31,603 per month for the minor children. [(Fam. Code 4055.)]  (B) [Adams] current gross income is $340,202 per month or $4,082,424 per year for the twelve month period ended December 31, 2004, which consists of (a) $304 per month or $3,649 per year in taxable interest income from investment accounts and (b) $339,898 per month or $4,078,776 per year in taxable self employment income, including the following types of income and amounts: (1) $321,250 per month or $3,855,000 per year in partner draws (draws, income tax payments on his behalf, bonus payments, advances and loans forgiven) from Endeavor Talent Agency; (2) $15,315 per month or $183,780 per year in partner draws from EA Asset Holdings; and (3) $3,333 per month or $40,000 per year in profit sharing from Endeavor Talent Agency. [(Fam. Code 4058, subd. (a).)]  (C) [Adams] allowable deductions from his gross income are as follows: (1) state and federal income tax liability of $146,352 per month or $1,756,224 per year, which includes the following tax deductions: (a) $4,058 per month or $48,696 per year as home mortgage interest; and (b) $6,640 per month or $79,680 per year as real estate taxes. [(Fam. Code 4056, subds. (b)(3) & 4059.)]  (D) [Adams] current net disposable income is $193,850 per month or $2,326,200 per year. [(Fam. Code 4056, subd. (a)(1) & 4059.)]  (E ) [Adams] actual federal income tax filing status is married filing joint. [(Fam. Code 4056, subd. (b)(2).)]  (F) The approximate percentage of time [Adam] has primary physical responsibility for the minor children compared to [Jami] is 42%. [(Fam. Code 4056, subd. (b)(4).)] The Court finds that [Jami] provided sufficient evidence of the actual time each party had primary physical responsibility for the minor children . . . and that [Adams] proffered interpretations of the existing child custody order on this issue are incorrect. The Court finds that [Jamis] evidence established by preponderance of the evidence that [Adams] defacto primary physical responsibility for the minor children on weekends was less than the dejure amounts stated in the existing custody order and that no language in the existing order would permit the Court to disregard such evidence (as opposed to changes in weekday time which were expressly agreed by the parties not to affect custodial time percentage) in making this determination.  (G) [Jamis] gross income includes the following sources: (1) $943 per month or $11,316 per year in taxable interest and dividends. [(Fam. Code 4058.)] [Jami] is claiming four (4) dependents and her new spouse has wages and salary of $9,833 per month. [(Fam. Code 4056, (b)(3) & 4059.)]  (H) [Jamis] current net disposable income is $844 per month or $10,128 per year. [(Fam. Code 4056, subds. (b)(1) & 4059.)]  (I) [Jamis] actual federal income tax filing status is married filing joint. [(Fam. Code 4056, subd. (b)(2).]  3. [Adams] Failure to Meet His Burden of Proof of Demonstrating that Special Circumstances Exist to Deviate from Guideline. [Adam] has failed to demonstrate by a preponderance of admissible evidence and as a matter of law that it is appropriate on the facts and circumstances of this case to deviate from the current Statewide Uniform Child Support Guideline in this case under Family Code Sections 4057 [subdivisions (b)(3) and (b)(5)] in accordance with the following findings of fact and law.  (A) [Adam] has an extraordinarily high income within the meaning of Family Code Section 4057[, subdivision (b)(3)]. However, [Adam] has failed to meet his burden of proof showing by a preponderance of the evidence that the presumptively correct amount of child support determined under the Guideline formula would be unjust or inappropriate in this case and would exceed the reasonable needs of the children consistent with the principles set forth in Family Code Section 4053. [See [(Fam. Code 4057, subd. (a), (b) & 4053 subd. (k); see e. g. In re Marriage of Hubner (Hubner II) (2001) 94 Cal.App.4th 175, 183.)]  (1) The Court has considered the lifestyle and standard of living of [Adam], who is the high earning parent, as part of its consideration of the appropriate level of child support: A child is entitled to be supported in a style and condition consummate with the position in society of its parents. [(Hubner II, supra, at 187.)] Where one party has an income capable of providing a lifestyle much in excess of the other parent, the children are entitled to life at a level closer to the more opulent lifestyle, even if that level of support may as a practical matter, produce a benefit for the custodial parent. [(See In re Marriage of Hubner (Hubner I) (1988) 205 Cal.App.3d 660, 668; Fam. Code, 4053, subds. (f) & (g).)] [Adam] has not met his burden of proof of showing by a preponderance of the evidence what the reasonable needs are of these two children whose high earning parent has the income and lifestyle of [Adam]. [Adam] has not provided any competent, admissible evidence or indeed any cognizable legal argument as to what amount would meet the reasonable needs of these two children whose high earning parents after-tax income exceeds $190,000 per month. With regard to the Courts consideration of the factor of [Adams] lifestyle and standard of living in determining the appropriate level of child support, [Adam] has failed to address the guiding principles set forth in Family Code Section 4063[, subdivisions] (f) and (g).  (2) Assuming arguendo that the current reasonable needs of the children could be determined by allocating the historic expenses of support recipients household between the recipient and the children in an appropriate case (but seeMarriage of Cheriton[, supra,] 92 Cal.App.4th [at p.] 293), and that this was an appropriate case to do so, the Court finds the testimony of [Jamis] expert, Andrew Hunt, CPA, to be more persuasive than that of [Adams] expert, David Swan, CPA, and it would adopt Mr. Hunts opinion in this regard. Mr. Hunt opined that [Jamis] actual average monthly family living expenses were $44,436 for the 24 month period ended December 31, 2004, and that the average monthly childrens expenses, if such could be determined by allocation, were $29,521 for the same period. ([Jamis] Exhibit 7.) The Court rejects Mr. Swans approach to evaluating the actual expenditures of [Jami] and the children finding it to be arbitrary and sometime clearly incorrect. The Court finds that [it] is appropriate to allocate all of [Jamis] housing expenses (determined by Mr. Hunt to be $15,104 per month on average over the period), including payments on a 15 year mortgage, to the childrens reasonable needs, where such amount is far less than the mortgage payments alone on [Adams] house (determined by Mr. Hunt to be $25,448 per month). [Citation.]  (3) The argument that the reasonable needs of the minor children can be measured by actual expenditures might be compelling in the proper case, such as where Guideline child support based on the income of an extraordinarily high wage earner had been paid and the recipient of support had spent far less than the amount of Guideline child support over some considerable period of time. No published appellate decision has considered such facts, but such an argument is not persuasive in this case in any event, where (a) the period of time over which the Guideline child support amount under the Amended Judgment has been actually paid is only two years, (b) the preponderance of the evidence is that [Jamis] actual total monthly expenses were well in excess of either the amount of Guideline child support ordered under the Amended Judgment (i.e. $26,971 per month) or the amount determined currently under the Statewide Uniform Child Support Guideline formula (i.e., $31,603 per month), and (c) the preponderance of the evidence is that the difference, if any between the allocated expenditures of the children and either the old or the new Guideline child support amount is not very great.  (4) The Court finds that major expenditures, for example Bnai Mitzvot, are on the immediate horizon for the minor children for which [Jami] may wish prudently to provide a reserve from current support. The Court rejects [Adams] argument, that he should be permitted to pay less than the applicable Guideline child support amount to [Jami] and then pay directly the entirety of these upcoming special expenses, as inappropriate for the reasons stated on the record by [Jamis] counsel at the hearing. For the same reasons, the Court declines to second-guess [Jamis] day-to-day decisions concerning housing and other expenses. This Court is not authorized under the Family Code, nor would it be good fiscal or public policy for the Court, to assume the role of auditing, second-guessing and micro-managing the Guideline child support recipients discretionary household budget expenditures. Rather, the Court appropriately focuses its attention on the standard of living that the extraordinarily high income earning parent is providing to the children and the extraordinary income earners ability to pay support to the less financially advantage parent in order to minimize significant disparities in the childrens living standards in the two homes. [(Fam. Code 4053, subd. (g).)] The preponderance of the evidence in this case is that [Adam] is providing an increasingly luxurious standard of living for the children when they are with him, and that he is able to pay the increased Guideline child support amount to appropriately improve the standard of living of [Jamis] household to improve the lives of the children when they are with her. [(Fam. Code 4053, subd. (f).)] [Adam] has provided no cognizable legal authority, no compelling facts and no persuasive policy reason in support of his argument that the support payor rather than the support recipient should control and decide how to best utilize the Guideline child support funds awarded to the support recipient. Indeed, the case law on the subject is to the contrary. [(Marriage of Chandler[, supra,] 60 Cal.App.4th [at p.] 130.)]  (B) [Adam] has failed to meet his burden of proof of showing by a preponderance of the evidence that application of the presumptively correct amount of child support determined under the Guideline formula, consistent with the principles set forth in Family Code Section 4053, would be unjust or inappropriate due to special circumstances in this particular case. [Citation.]  (1) [Adam] does not contend that any of the special circumstances statutorily recognized under Section 4057 [subdivision] (b)(5)(A) to (c) exist in this particular case. Instead, [Adam] argues that special circumstances exist in this particular case, (a) alleging that [Jami] has diverted or misused child support, and (b) because [Jamis] financial contribution to the support of the children is small relative to his contribution. The Court rejects both of these arguments as unsupported by the facts adduced by a preponderance of the evidence and/or by the applicable law.  (2) The Court finds by a preponderance of the evidence and as a matter of law that [Jami] did not misuse child support funds. The Court finds the testimony of [Jamis] expert, Mr. Hunt, more persuasive than that of [Adams] expert, Mr. Swan, in this regard. The Court finds that during the relevant period, [Jami] had over $500,000 in funds available to her from sources other than current child support. The Court finds that [Jamis] total average monthly family living expenses (i.e., $44,436 for the 24 month period ended December 31, 2004) were well in excess of the amount of monthly Guideline child support (i.e., $26,971) being paid to [Jami] under the Amended Judgment. [Jami] did spend funds for herself personally and for persons in her household other than the children who are the subjects of this child support proceeding, but [Adam] failed to establish by the preponderance of the evidence that such purchases came from his current child support payments as opposed to other deposits into her account from personal and institutional loans, fee contributions from [Adam], reimbursements from [Adam] and support arrears from [Adam]. [Adams] expert did not trace any single transaction to [Jamis] receipt of monthly child support. The Court expressly rejects [Adams] argument that the other deposits were not [Jamis] money to spend as she desired. There is no legal basis for said claim, nor was one cited by [Adam].  (3) To the extent that child support payments received by [Jami] were used to pay for such communal assets as the house, home improvements and a washer and a dryer, that is the kind of incidental benefit to the custodial parent that the courts have held do not make an award of guideline child support unjust or inappropriate. As Section 4053, [subdivision] (f) states: Children should share in the standard of living of both parents. Child support may therefore appropriately improve the standard of living of the custodial household to improve the lives of the children. [Citations.]  (4) The Guideline child support amount is not unjust or inappropriate simply because [Jami] does not contribute as much as [Adam] to the support of the minor children from her other income sources. The Statewide Uniform Child Support Guideline formula takes into account the incomes of both parents and that was done in this case. [Adam] conceded at the hearing that the imputation of any reasonable amount of income to [Jami] would not make much difference in the Guideline child support amount. No imputation of income to [Jami] was sought by [Adam] at the hearing, which moots [the] request for findings of fact and law on [Jamis] earning capacity. The fact that the application of the formula to a high income earner produces a child support amount which renders any material actual out-of-pocket expenditure by the other parent unlikely does not change the plain language of the Family Code and does not, of itself, provide grounds for a downward departure from the presumptively correct Guideline child support amount. (Original italics.)
Adam objected to the tentative statement of decision by rearguing the issues raised in his order to show cause for child support modification. Adam further argued that Judge Steinberg had improperly resolved the issues in the matter by failing to adequately address the issues raised by him. Adam also contended Judge Steinberg should have credited Mr. Swans conclusions. On July 15, 2005, Judge Steinberg entered an order directing Adam to pay Jami the guideline support sum of $31,603 per month per child. After posting a bond on July 26, 2005, Adam filed a notice of appeal from the modified child support order on August 11, 2005.
C. The Litigation Costs Award
In a June 23, 2005 minute order, Judge Steinberg directed the parties to file requests for litigation costs by July 19, 2005 and responses by August 2, 2005. Adam filed a request for attorney fees and costs as an offset of $58,000 against any fees he might be ordered to pay. He argued an offset was warranted because Jami caused him to incur attorney fees before the issue of either partys request for modification of support was raised before Judge Steinberg. Adam argued he should not be required to pay litigation costs for the period of time between September 2003 and July 2004 when there was no ongoing litigation between the parties. He further argued, during the applicable period of time: Jami was the party responsible for the fees because she was not complying with various court orders which led to disputes; Judge Steinberg found that Jami had over $500,000 of her own funds during the applicable period of time which enabled her to pay her own fees; and Adam had no notice that Jami would ask for an award of litigation costs. In support of his offset request, Adam attached his own declarations and two by his attorney, Ms. Greene outlining the disputes between the parties. Adams declaration which had been executed in December 2004 stated, among other things, that Jami engaged in inappropriate behavior during August 2004 while he was on vacation with the children in Hawaii including bringing ex parte motions. He outlined disputes over Fathers day, weekends, and visitation exchange points. He also restated his motives for bringing the order to show cause to address his claims that Jami misused child support and had falsely represented she intended to purchase a new home in 2002. Adam continued to express dissatisfaction with the November 8, 2002 child support order.
Ms. Greene stated the parties were engaged in a dispute over the drop off and pick up points for the children sometime in August 2004 after Adam moved to Beverly Hills. The declaration then outlined the very litigious aspect of the parties dispute between August and December 2004. In a second declaration dated March 16, 2005, Ms. Greene addressed comments by Jamis counsel as to the parties dispute between August 2004 and February 2005.
Jami requested litigation costs of $266,778.48 consisting of: $199,543 in legal fees; $60,136 in accounting fees; and $7,100 in bookkeeping fees. In support of her request she filed her own declaration and the declarations of: her counsel Scott Weston; her accountant, Mr. Hunt; and a bookkeeper, Marilyn Anderson. Jami also attached exhibits supporting her litigation costs request.
On August 22, 2005, Judge Steinberg issued a ruling on the request for litigation costs directing Adam to pay Jami $246,268.54. The ruling contains a statement explaining the basis of Judge Steinbergs decision. On August 31, 2005, Adam filed objections to Judge Steinbergs ruling and a proposed statement of decision. On September 30, 2005, Judge Steinberg issued a final statement of decision on the litigation costs which states: [Adam] seeks to offset against any fees he may be ordered to pay the amount of $58,000 which was incurred by [Jami] before the issues of either partys request for modification of child support was raised with the Court. He claims that for the period September 2003 to December 30, 2004 [Jami] is not entitled to fees because either there was no ongoing litigation between the parties or [Jami] engaged in conduct (and incurred fees) unrelated to the dispute that was ultimately determined by with respect to [Adams order to show cause]. [Adam] also seeks an offset against the attorneys fees and costs awarded in connection with [Adams order to show cause] on the grounds that [Jami] engaged in conduct which caused those fees to escalate.  In reaching its decision concerning these requests the Court considered the financial data provided by the parties including their income and expense declarations and the reports and declaration of their respective forensic accountants. The Court also considered each partys written settlement proposals. . . .  The Court makes the following findings based upon the preponderance of the evidence.  Both parties claim that communication with other is impossible and, accordingly they are required to use the services of lawyers to deal with even trivial disputes. Both parties and their lawyers claim that the other has acted in bad faith and in a fashion to increase the legal fees. From a review of the declarations filed by both sides, there appears to be some truth to the positions of both. [Jami] has not sought fees under Family Code Section 271 nor has [Adam] made such a claim. . . . [Jami] . . . seeks fees under Family Code Section 2030. That section provides that the Court shall [ensure] that each party has access to legal representation to preserve each partys rights by ordering, if necessary based on the income and needs assessments, one party . . . to pay to the other party, or to the other partys attorney, whatever amount is reasonably necessary for attorneys fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding. [Subdivision] (b) of that section provides that the fees and costs may be awarded for legal services rendered or costs incurred before or after the commencement of the proceeding.  There are multiple proceedings for which attorneys fees are sought by [Jami]. Section 2030(b) contemplates that fees may be awarded even before an order to show cause is filed. The Court expressly reserved jurisdiction to award fees on custody issues after March 31, 2002 in its November 8, 2002 Order. Furthermore, the Court expressly reserved jurisdiction to award fees in connection with the ex-partes brought by the parties in August 2004 and September 2004. Therefore, all the fees incurred by [Jami] for which she seeks payment by [Adam] are recoverable and [Adams] objection that they are not because there was no ongoing litigation until December, 2004 is not well taken.  Among the fees sought by [Jami] are those associated with correspondence regarding enforcement of the judgment including pick-up and drop off, tutoring, reimbursements, etc., temple dues and similar matters. These fees, incurred from September 2003 to May 2004, total $14,250.00. There are also fees associated with [Jamis] proposed Orders to Show Cause to modify the pick-up and drop off location, reimbursements, temple dues and related attorneys fees totaling $13,975.12. There are fees totaling $317.50 for paralegal document control incurred between September 2003 and July 2004. There are fees associated with [Jamis] ex parte for enforcement of the court order for travel and her response to [Adams] ex parte seeking a restraining order totaling $8,393.50 incurred during August and September 2004. There are also fees in the amount of $6,728 for discovery related to attorneys fees reserved from the August hearing on the ex-partes. Finally, there are fees of $96,016.00 related to [Adams order to show cause]. . . .  In assessing a request for fees and costs under Section 2030, the Court must take into account the incomes and needs of the parties. However, as provided in Family Code Section 2032, Financial resources are only one factor for the court to consider in determining how to apportion the overall costs of the litigation equitably between the parties under their relative circumstances. Furthermore, the Court first must determine what fees are reasonably necessary.  The fees incurred in connection with the correspondence regarding miscellaneous issues ($14,250) and in connection with a potential [order to show cause] regarding some of those issues ($12,895 and $1,080) appear to be excessive in light of the issues involved. [Jami] claims that she had to incur fees because [Adam] would not talk to her, yet the billing invoices reflect many communications between counsel for both sides during the period. Therefore, these simple matters should not have required almost $30,000 in fees to address and resolve. Only half of those fees- i.e., $14,112.50 appears to be reasonably necessary. On the other hand, the work in connection with the ex-partes and with [Adams order to show cause] was all reasonably necessary.  [Adam] is a very high earner and has the ability to pay the fees of [Jami]. [Jami] has need for payment of some, but not all, of her fees. She once worked and is capable of doing so again. No income was sought to be imputed to her in the calculation of child support because of the minimal difference such income would make in the calculation of guideline support, but that does not foreclose the Court from considering the fact, never contested, that she has earning capacity. Her husband is employed and contributes to her support. She has most of her living expenses paid for by reason of the child support ordered for the twins of the parties. Her housing and utilities are paid for this way. Therefore, while she has a need for contribution to her attorneys fees, she is certainly able to bear the cost of some of them, particularly if she would realize her earning capacity by returning to work. As noted above, the reasonably necessary fees associated with dealing with [Adam] on ongoing issues related to custody and visitation, including work related to her efforts to make changes in the arrangements, total $14,112.50. This averages to less than $1,000 per month for the period during which these fees were incurred (September 2003 to July 2004). While [Adam] clearly has the ability to pay all of these fees, it is equitable in the courts view in light of her need and other factors, that [Adam] pay only one half of this amount as a contribution to [Jamis] fees, i.e. $7,056.  The remainder of the reasonably necessary fees and costs were incurred in connection with either the ex-parte brought by [Jami] (on which she prevailed) or the ex-parte brought by [Adam] (on which he did not prevail) and [Adams] request for a modification of child support. [Jami] prevailed in all of these matters. [Adams order to show cause] involved a great deal of discovery and work by the lawyers and the accountants on both sides. It raised complex issues of both fact and law. In light of the very large disparity between the incomes of the parties (even assuming some earning capacity on the part of [Jami]) and in light of the nature of the matters for which the fees were incurred, [Adam] is ordered to pay all of such fees. The legal fees, after deduction for the fees found not to be necessary ($14,112.50) and those which [Jami] has been ordered to bear herself ($7,056), total $149,469. Costs were $28,904. Accountants fees were $60,795 and Ms. Andersons fees were $7,100. All of those fees were also reasonably necessary.
On September 30, 2005, Judge Steinberg entered an order directing Adam to pay Jami $246,268.54 towards Jamis litigation costs for the order to show cause and ensuing litigation. Adam appealed from the attorney fee award on October 17, 2005. We ordered the child support modification and litigation costs appeals consolidated on January 19, 2006.
A. The Child Support Order
1. Adams contentions
Adam raises a number of theories as to why the current child support order must be reversed including that he is entitled to utilize Jamis historical spending as a basis for determining the twins needs. In a shotgun approach, Adam argues that Judge Steinbergs order refusing to decrease the amount of the statutory support guideline must be reversed. The following arguments are presented: he is an extraordinarily high income earner and the amount generated by the formula exceeds the needs of the twins ( 4053, subd. (k)); Jami is not contributing to the support of the twins commensurate with her custodial time ( 4053 & 4057, subd. (b)(5)); Judge Steinberg failed to make any finding of what Jamis earning capacity is for purposes of section 4053; Judge Steinberg ignored $500,000 of Jamis money as a source for a contribution from Jami in its guideline calculation; Judge Steinberg erroneously found that Adam had conceded that there was no need to determine a contribution from Jami; Judge Steinberg unfairly shifted the entire burden for supporting the twins onto Adam; Judge Steinberg ignored the rebuttable factors provided in section 4057 for deviating from and awarding less than the guideline amount; Judge Steinberg misinterpreted section 4057 to mean that Jami is entitled to more child support based on Adams spending habits rather than the actual needs of the twins; consideration of Adams higher mortgage should have created a special circumstance for deviating from the guidelines rather than a basis to award Jami more child support so she could create an improper savings account; Judge Steinberg ignored or failed to consider a number of factors such as Jamis unemployment and credibility; Judge Steinberg awarded Jami enough support to remodel her home and cover extra monthly voluntary principal payments; Judge Steinberg failed to consider that Jami was awarded more child support in 2002 because she said the twins needed a bigger home but decided to remodel her home instead; the evidence including documents filed for the November 8, 2002 child support order did not support that Jami had spent $500,000 of her own money; Judge Steinberg failed to actually assess the twins needs which is not intended to match the lifestyle of the wealthier parent; Judge Steinberg misapplied section 4061 additional child support expenses as guideline needs; Judge Steinberg misinterpreted In re Marriageof Cheriton, supra, 92 Cal.App.4th at page 293, as impeding her discretion to review Jamis historical use of child support from the date of the November 8, 2002 child support order; an indirect benefit of child support cannot be spousal support; Adam rebutted the statutory presumption that the guideline amount was correct by producing evidence which Judge Steinberg disregarded in favor of Jamis inaccurate evidence; and Adam should not pay more child support due to the necessity for business travel.
It should be noted that Adams opening brief contains numerous arguments which are based on misstatements of the law and citations to unpublished appellate court opinions. Furthermore, as illustrated by the lengthy and factual context of Adams claims of errors, the crux of most of his assertions are disputes with Judge Steinbergs resolution of disputed factual matters. As can be noted, notwithstanding the plethora of claimed insufficiencies in Judge Steinbergs decision, the only real issues here are whether she abused her discretion in determining that the November 8, 2002 child support order should not be modified downwardly; but rather should be increased due to changed circumstances.
2. The guidelines and review standards
Child support is a highly regulated area of California law. (In re Marriage of Williams (2007) 150 Cal.App.4th 1221, 1236-1237; In re Marriage of Cheriton, supra, 92 Cal.App.4th at pp. 282-283.) Section 4055 requires courts to utilize a mathematical formula for calculating a statewide uniform guideline to determine the appropriate amount of child support. ( 4050, 4052, 4053, 4055.) The amount of child support to be paid is calculated based on a formula which considers the parents annual gross income ( 4055, 4058) and annual net disposable income. ( 4059.) There is a presumption that the guideline amount established by the formula is correct. ( 4052, 4053, subd. (k), 4057.) Courts are not allowed to deviate from this formula except in the special circumstances set forth in the statutory scheme. (Ibid; In re Marriage of Cheriton, supra, 92 Cal.App.4th at p. 283.) Section 4052 limits a courts discretion to vary from the statutory framework by providing: The court shall adhere to the statewide uniform guideline and may depart from the guideline only in the special circumstances set forth in this article. (See In re Marriage of Williams, supra, 150 Cal.App.4th at p. 1237; In re Marriage of Laudeman (2001) 92 Cal.App.4th 1009, 1013.) Thus, where a parent seeks a variance from the statutory guideline, [T]he only discretion a trial court possesses is the discretion provided by statute or rule. (In re Marriage of Butler & Gill (1997) 53 Cal.App.4th 462, 465; accord Asfaw v. Woldberhan (2007) 147 Cal.App.4th 1407, 1415.) One circumstance allowing for the court to exercise is discretion is where one parent is an extraordinarily high income earner. ( 4057, subd. (b)(3).) A child support order including whether a modification is warranted is reviewed for an abuse of discretion. (In re Marriage of Cheriton, supra, 92 Cal.App.4th at p. 283; In re Marriage of Kepley (1987) 193 Cal.App.3d 946, 951.)
3. Adams downward modification request
Initially, it must be noted that Adams order to show cause sought to modify Judge Edmons November 8, 2002 child support order to reduce his support payments from $26,971 to $12,000. Prior to entry of the November 8, 2002 order, the parties litigated the issue of whether the twins needs would be met by the guideline support amount. Judge Edmon found the guideline support amount was correct. Adam did not appeal from the November 8, 2002 order ruling that the guideline child support payment amount for the twins was $26,971. The primary changed circumstance was that Adams income had actually increased since the November 8, 2002 child support order by approximately $500,000 annually. This is not a basis for establishing a change of circumstances warranting a downward adjustment. As the appellate court in the case of In re Marriage of Leonard (2004) 119 Cal.App.4th 546, 556 explained: An order of child support may be modified or terminated at any time as the court determines to be necessary. ( 3651, subd. (a).) Statutory procedures for modification of child support require a party to introduce admissible evidence of changed circumstances as a necessary predicate for modification. [Citations.] The burden of proof to establish that changed circumstances warrant a downward adjustment in child support rests with the supporting spouse. [Citation.]  Ordinarily, a factual change of circumstances is required [for an order modifying support] (e.g., increase or decrease in either partys income available to pay child support). [Citation.] There are no rigid guidelines for judging whether circumstances have sufficiently changed to warrant a child support modification. So long as the statewide statutory formula support requirements are met (Fam. [Code,] 4050 et seq.), the determination is made on a case-by-case basis and may properly rest on fluctuations in need or ability to pay. [Citations.] The ultimate determination of whether the individual facts of the case warrant modification of support is within the discretion of the trial court. [Citation.] The reviewing court will resolve any conflicts in the evidence in favor of the trial courts determination. [Citation.] (Orig. italics, see also In re Marriage of Brinkman (2003) 111 Cal.App.4th 1281, 1292; In re Marriage of Cheriton, supra, 92 Cal.App.4th at p. 298.) A trial court has no jurisdiction to modify an existing child support order unless there are changed circumstances which have occurred after the entry of the original order. (In re Marriage of Brinkman, supra, 111 Cal.App.4th at p. 1288; In re Marriage of Mulhern (1973) 29 Cal.App.3d 988, 992.)
The only evidence of changed circumstances were: Adams annual income had increased by half a million dollars; the size of Adams home had increased; the twins were older; Jami had remarried; and Jami had remodeled and refinanced her home rather than purchasing a new residence. On November 8, 2002, Judge Edmon ruled $26,971 was the correct amount of child support based on Adams annual income of approximately $3.6 million. Two years later, Adam sought to decrease his support obligation to $12,000 per month, which was well below the $26,971 child support statutory guideline.
Judge Steinberg did not abuse her discretion when she found Adam failed to establish any of these facts constituted changed circumstances warranting a downward adjustment of the guideline support amount which had been determined on November 8, 2002 to be $26,971. In the absence of material changed circumstances, Judge Steinberg had the discretion to rule that Adams modification request was merely an untimely and improper collateral attack on the existing November 8, 2002 child support order. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, 480; In re Marriage of Mulhern, supra, 29 Cal.App.3d at p. 992.) The contention that Judge Steinberg abused her discretion in refusing to find changed circumstances that permitted a downward adjustment is frivolous. No abuse of discretion occurred.
4. Jamis modification request
Judge Steinberg granted Jamis request to modify the child support order to the guideline support amount of $31,603 per month. Adam does not dispute his dramatic increase in income constituted a changed circumstance. Rather, Adam contends Judge Steinberg erred in adjusting the guideline support amount because he is an extraordinarily high income earner. Adam further asserts the guideline amount exceeds the twins needs. Adam, however, presented no evidence of what the twins actual needs were. Rather, Adam sought to have Judge Steinberg base the child support order on Jamis spending history. Adam is really asserting that a parent receiving child support is required to periodically account for the use of the funds and the supporting spouse is entitled to dictate how the moneys are used. He has cited no statutory or case law which supports the requirement that the recipient of child support is required to account for the expenditures.
Likewise, there is no authority for his contention he is entitled to manage Jamis expenditure of child support payments. In any event, authority exists which supports the trial courts refusal to micro-manage Jamis expenditure of support funds. (See In re Marriage of Chandler, supra, 60 Cal.App.4th at p. 130 [The law does not provide for such control. Once the court determines the appropriate amount of child support, the supporting parent has no right to determine whether these funds are used to buy groceries, pay rent or pay for music lessons]; accord Wilson v. Shea (2001) 87 Cal.App.4th 887, 895-896.) For similar reasons, we disagree with Adams argument that Judge Steinberg misinterpreted In re Marriage of Cheriton, supra, 92 Cal.App.4th at page 293. In this regard, Judge Steinberg implicitly complied with the directive that, in implementing the statewide uniform guideline, a trial court is to apply the policy, The guideline seeks to encourage fair and efficient settlements of conflicts between parents and seeks to minimize the need for litigation. ( 4053, subd. (j); see In re Marriage of Armato (2001) 88 Cal.App.4th 1030, 1038.) If supporting parents are allowed to challenge the spending habits of the recipient of child support on an ad hoc basis, it would encourage litigation and dispute. As this case illustrates, such a rule certainly does not promote fair and efficient settlement of conflicts.
Furthermore, as previously noted, Adam sought a downward adjustment of the guideline support amount from Judge Edmons November 8, 2002 finding the guideline amount of $26,971 was correct. The issue of whether Judge Edmon correctly computed the guideline amount of $26,971 cannot be relitigated in this appeal. Rather, the only issue in this appeal is whether Adam rebutted the presumption that the guideline support amount should have been decreased from $31,603 to $26,971. The presumption in section 4057 is only evidence which can be weighed by the trier of fact. (In re Marriage of Mix (1975) 14 Cal.3d 604, 611-612; Laird v. T. W. Mather, Inc. (1958) 51 Cal.2d 210, 221; Weil v. Weil (1951) 37 Cal.2d 770, 788.) A disputable presumption may be rebutted by evidentiary fact. It is for the trier of fact to determine whether the proffered evidence outweighs the presumption. (In re Marriage of Mix, supra, 14 Cal.3d at pp. 611-612; Weil v. Weil, supra, 37 Cal.2d at p. 788; Olson v. Olson (1935) 4 Cal.2d 434, 437; In re Marriage of Friedman (2002) 100 Cal.App.4th 65, 72-73; McDonald v. Hewlett (1951) 102 Cal.App.2d 680, 688.) The determination will not be reversed on appeal if supported by substantial evidence. (In re Marriage of Mix, supra, 14 Cal.3d at pp. 612-613; Weil v. Weil, supra, 37 Cal.2d at p. 788; In re Marriage of Friedman, supra, 100 Cal.App.4th at pp. 72-73.) As the party seeking a downward adjustment to the presumptively correct guideline support amount, Adam had the burden of establishing that not only applying the formula to him would be unjust and inappropriate but the lower amount is consistent with the best interests of the children. ( 4056, subd. (a)(3); see also 4053, subd. (k), 4057, subd. (b)(3); In re Marriage of Wittgrove (2004) 120 Cal.App.4th 1317, 1328; Marriage of Hubner, supra, 94 Cal.App.4th at p. 183; County of Stanislaus v. Gibbs (1997) 59 Cal.App.4th 1417, 1424.)
Judge Steinberg found Adam had not rebutted the presumption of correctness by showing that it would be unfair or unjust due to the special circumstances of this particular case. ( 4057, subds. (a) & (b)(5).) Judge Steinberg found Adam had not proven that Jami diverted or misused child support. Judge Steinberg found in this respect: Jamis average monthly expenses for the 24-month period were $44,436 and the monthly guideline child support amount was $26,971; Jami had over $500,000 of her own funds available from sources other than the current child support order; Adam failed to prove the purchases Jami made for herself and others came from his child support payments; and Adam had not traced any single transaction to a monthly child support payment. In addition, Judge Steinberg ruled that the amount of Jamis contributions did not render the guideline child support amount unjust or inappropriate. The ruling in part was based on Adams concession that imputing income to Jami would not make much difference in the guideline child support amount.
For similar reasons, Judge Steinberg did not err in implicitly rejecting Adams claims that his wealthy lifestyle had no bearing on the issue of the childrens needs. (See In re Marriage of Hubner, supra, 205 Cal.App.3d at p. 667 [the courts focus for a child of a wealthy parent should be to insure the wealth flows to the youngster and not the custodial former spouse].) Adam claims the trial court failed to properly assess the childrens actual needs by utilizing Jamis exhibit No. 7, which served as a partial basis for Mr. Hunts opinion. According to Adam, Judge Steinberg incorrectly ruled no admissible evidence was offered on the issue of the twins needs. Adam argues exhibit No. 7 established t