Marriage of Galloway

Filed 12/14/07 Marriage of Galloway CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SIXTH APPELLATE DISTRICT

INTRODUCTION

This is third appeal arising from the dissolution action of appellant Gregory M. Galloway and respondent Suzanne P. Galloway.[1] In the first appeal we determined that the order awarding continuing temporary spousal support of $3,145 per month was based on the erroneous calculation that Gregorys monthly bank deposits averaged $10,000 from September 2001 through March 2002.[2] We reversed the order and remanded the matter for a recalculation of continuing temporary spousal support. (In re Marriage of Galloway(Oct. 20, 2003, H024940) [nonpub. opn.] (Galloway I).)

On remand, a trial was held and the trial court subsequently issued a judgment that included a recalculated award of retroactive temporary spousal support, as well as an award of permanent spousal support and an award of child support. The trial court also ruled, among other things, that the funds in the Marclyn Designs, Inc. checking account and a San Mateo Federal Credit Union checking account were Suzannes separate property; Gregory owed Suzanne $70,523 for the fair rental value of the family residence postseparation; Gregory was not entitled to reimbursement for postseparation payments to Suzannes in-home care provider; and Gregory breached his fiduciary duty by taking an item of community property, a tax refund check, without notice. Additionally, the trial court awarded Suzanne $60,000 in attorney fees and costs. Gregory challenges all of these rulings in the present appeal. For reasons that we will explain, we will affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Gregory and Suzanne were married on June 25, 1989.[3] They have two children, Marc, age 17 and Cheryl, age 15. In 1994, Suzanne was diagnosed with multiple sclerosis. The Social Security Administration designated Suzanne as totally disabled in 1998. Since January 2000 Suzanne has lived with her mother, Bette Perroton, except for a brief period in June 2000 when she returned to the family home.

On December 5, 2000, the Santa Clara County Superior Court appointed Suzannes mother and her sister, Ann Hayes, to be her temporary conservators. The conservators retained an attorney who filed the instant dissolution action on Suzannes behalf on May 10, 2001. The conservatorship was made permanent on September 7, 2001. Bette Perroton was subsequently replaced as a conservator by Suzannes other sister, Nancy Ellickson.

After Suzanne began living with her mother, Gregory received and deposited 11 Social Security checks that were made payable to Suzanne during the period of January 2000 to January 2001. A hearing was held on May 16 and 24, 2002, regarding the Social Security checks, among other issues. On June 23, 2002, the court made the following findings: The Court does not find [Gregory] credible. The Court finds [Gregory] has a present ability to be employed and that with reasonable efforts, employment at the level attributed in the dissomasters could be available now with [a] modicum of effort earlier by [Gregory]. The Court finds that [Gregory] has not made reasonable efforts to become employed or satisf[y] the Courts earlier employment efforts order. His only efforts are to attend one seminar at a luxury resort in Arizona and once a month meetings of the Churchill Club. Furthermore, based upon the expenses [Gregory] is manag[ing] to pay without incurring debt, based on the deposits in 2002 averaging $11,443.00 a month, and based on the deposits in early 2002 averaging almost $10,000.00 a month, the Court believes [Gregory] is currently earning that amount as his gross income.

In its order of June 23, 2002, the trial court also found that Gregory had converted Social Security checks totaling $12,588. Gregory appealed, but we did not reach the issue in our first opinion in this matter (Galloway I, supra, H024940) because we determined that Gregory had agreed to drop his appeal of that issue during an October 2, 2002, hearing in Suzannes conservatorship case. However, we also determined in Galloway I that Gregorys appeal of the order awarding continuing temporary spousal support of $3,145 per month was meritorious, because the order was based on the erroneous calculation that Gregorys monthly bank deposits averaged $10,000 from September 2001 through March 2002. We reversed the order and remanded the matter for a recalculation of continuing temporary spousal support.

After remand, a trial was held on May 19, 2005 and July 15, 2005. The issues to be tried included the recalculation of temporary spousal support retroactive to May 10, 2001, permanent spousal support, child support, characterization of the family residence, reimbursement for Gregorys postseparation use of the family residence, reimbursement of cashed Social Security checks, life insurance, Epstein credit,[4] and attorney fees and costs. The trial court issued a 45-page statement of decision on October 12, 2005. No party filed an objection to the statement of decision and judgment was entered on April 5, 2006.

Thereafter, Gregory filed a motion for reconsideration and new trial on April 21, 2006. The motion was denied on July 14, 2006. Gregory filed a notice of appeal and an opening brief that raises eight issues. We will discuss each issue in turn, including a summary of the evidence presented at trial and the trial courts rulings that are pertinent to each issue.

DISCUSSION

I. Spousal Support

Gregory asserted in his trial brief that he has overpaid spousal support since May 2002 and he is entitled to spousal support of $414 per month from Suzanne. Suzanne stated in her trial brief that the issue turned on a determination of Gregorys earnings, and requested an award of permanent spousal support and temporary spousal support retroactive to May 10, 2001, with an Epstein credit to Gregory for his separate property mortgage payments made on the family residence from January 2000 to May 9, 2001.

A. Trial Evidence Pertaining to Spousal Support

Charles Helfrick, an accounting expert retained by Suzanne, testified regarding his review of bank deposits in various bank accounts for the years 2000, 2001, 2002, 2003, and part of September 2004. His review included examination of bank statements, copies of deposit slips, and the underlying checks making up the deposits. He was not able to distinguish whether the source of the deposits was loans or earned income. Helfricks reports of July 29, 2004 and September 4, 2004, were admitted into evidence.

Gregory testified regarding his income and expenses. Additionally, his federal income tax returns for 2000, 2001, 2002 and 2003 were admitted into evidence, as were his income and expense declarations for 2001, 2002, 2003, 2004, and 2005. Gregory also prepared exhibits showing his bank account deposits, including deposits of loans, for 2002, 2003, 2004, and 2005. According to Gregory, his average monthly income for the 12 months preceding the May 19, 2005 trial date was $1,800. His 2004 federal income tax return indicated that his income for 2004 was approximately $21,000. To earn income in 2004, Gregory did consulting work in real estate comparative market studies and worked for friends doing drywall, painting and trash hauling.

Gregorys educational background includes graduation from high school in 1976. He is currently taking real estate courses at local community colleges and has passed the test required to obtain a real estate license. During the last two years, Gregory worked for Barry Swenson Builders and earned $12,000. He also earned $7,000 working for Vance Brown Builders.

Gregory estimated that his monthly expenses during the year preceding the trial were approximately $5,100, including the childrens expenses. The trial court inquired as to how Gregory paid monthly expenses of $5,100 on a monthly income of $1,800. Gregory explained that he borrowed money from friends, family, and his girlfriend. He acknowledged that he did not have a promissory note for any of the loans from his family and friends, except for his loan from his girlfriend, Cynthia Nelson, who is currently paying his attorneys fees.

Gregory further testified that during the first five months of 2005 he earned $7,000 and borrowed $8,000, for a total income of $15,000. The trial court then inquired as to what accounted for the difference between the expenses of $25,000 for the first five months of the year and the available income of $15,000 during the same period. Gregory reviewed his records and determined that his actual expenses for the first five months of 2005 were $12,102, not $25,000. The discrepancy on his income and expenses declaration was due to Gregorys estimation of future expenses.

On the second day of trial, July 14, 2005, Gregory filed an income and expense declaration regarding the preceding 12 months. His average monthly income was $1,858 and his average monthly expenses were $4,124. He borrowed approximately $2,000 per month to make up the difference between his income and expenses. The list of loans provided by Gregory indicated that he had borrowed $22,500 from his brother, Rick Galloway, to pay for living expenses. The other loans listed were primarily used to pay attorney fees of $187,500. At the time of trial, his total attorney fees in this case were approximately $246,000.

Gregorys personal loans from friends and family total approximately $200,000, including a loan of $112,000 from his girlfriend. While there is a promissory note for that loan, she has allowed him to stop making monthly payments on the loan for a year while he tries to straighten out his financial affairs. His total cash assets at the time of trial were $3.19.

Timothy Harper, a vocational expert retained by Gregory, testified regarding his vocational assessment. Harper described Gregory as attempting to reinvent himself after his previous success in a floppy disk drive business that later became bankrupt. Although Gregory had become a consultant, his income was not consistent. Gregory had some barriers to employment, including the economic downturn in Silicon Valley, his lack of a college degree, the bankruptcy of his business, his past 10 years of work as an independent consultant rather than as a company employee, and the emotional impact of Suzannes illness. Additionally, Harper viewed Gregory as having the characteristics of an entrepreneur rather than an employee.

Despite Gregorys lengthy period without steady employment, Harper found that Gregory had made more than reasonable efforts to find work and to make money as a consultant. He also believed that seeking a real estate career was a prudent course for Gregory to follow, based on his brief employment with Barry Swenson, a well-known real estate developer. However, Harper acknowledged that it was quite extraordinary that Gregory had been out of work for so long. During the past five years of performing between 400 and 500 vocational assessments per year, he had only seen three or four other people who had been unemployed for the same amount of time as Gregory, four and one-half years. Harper also agreed that it was odd that Gregory had not received a single written reply to a company job application for two or three years.

Regarding earning capacity, Harper concluded that Gregory reasonably could earn an annual income of $35,000 to $50,000 after six months of maximum good faith efforts to find a job. The high end of his earning capacity would be $80,000 per year.

Cheryl Foden, a vocational expert retained by Suzanne, testified regarding her vocational evaluation of Gregory, including her report dated December 31, 2001. Foden also reviewed Timothy Harpers deposition testimony and noted that she had several points of agreement with him. Both vocational experts determined that Gregory was basically a salesperson; he could obtain a job within 90 to 120 days; the low end of his earning capacity was $35,000 to $50,000 per year; and the high end of his earning capacity was $60,000 to $80,000 per year. Foden believed that positions in both salary ranges were available in the period of 2000 through 2004, based on her labor market job research.

Foden did not agree with Harper that Gregory had substantial barriers to employment. She noted that other job seekers were able to search for jobs during divorce litigation and while caring for children. Foden also pointed out that Gregorys children were teenagers and that Suzanne was not living with him. Furthermore, Foden had not seen anyone in her caseload who, like Gregory, had not gotten a job in five and one-half years. She believed that Gregory would have obtained a job in the $60,000 to $80,000 salary range if he had focused on getting employment in September 2001.

When informed that Gregory had earned less than $35,000 to $50,000 per year in the past three or four years, Foden responded that she would not view Gregorys job search as diligent. She stated, That was the very minimum amount that . . . Tim Harper and I both felt, he could earn in relatively short order. Both experts thought that. Now were looking five and a half years later; four and a half years later since I saw him. If hes still not earning that then I just dont believe that the efforts have been made.

Although Foden had not interviewed Gregory since September 28, 2001, she had reviewed his subsequent job search emails for 2001 through part of 2004. She acknowledged that the quality of the emails was excellent and indicated some effort on Gregorys part. However, she did not have sufficient information to give a formed and full opinion as to what his job search efforts had been after September 28, 2001. Also, she admitted that Gregory was not qualified for all of the jobs listed in her report as available.

B. Judgment and Statement of Decision

The trial court issued a statement of decision on October 12, 2005, that contained rulings on a number of issues, as summarized below.

Temporary Spousal Support.

With respect to temporary spousal support, the court exercised its discretion to order temporary spousal support retroactively to May 10, 2001, based on the evidence of each partys annual income and expenses. The court found that for all relevant periods, Suzanne was disabled and unable to work (pursuant to the parties stipulation), while Gregory was the primary custodial parent of the parties two children.

Suzannes income and expense declarations indicated that in 2001 she received monthly Social Security benefits of $1,083 and monthly income from a mini-storage property of $4,613, with medical expenses of $2,552 per month and health insurance costs of $155 per month. In 2002, she received Social Security benefits of $1,207 per month and income from the mini-storage property of $6,715 per month, with medical expenses of $4,898 per month and health insurance costs of $182 per month. In 2003, Suzanne received monthly Social Security benefits of $1,220 and income from the mini-storage property of $4,067 per month, with monthly medical expenses of $4,931 and health insurance costs of $182 per month. Suzannes mini-storage income ceased in September 2003 when her principal was cashed out.

In 2004, Suzanne received monthly Social Security benefits of $1,239 per month and other income of $30 per month, and had monthly medical expenses of $5,462. In 2005, up to the trial date of May 19, 2005, Suzanne received monthly Social Security benefits of $1,262 per month plus three $170 payments of spousal support, with health insurance costs of $289 per month.

As to Gregory, the trial court found that his 2001 income available for support was $5,318 per month, based on the opinion of the accounting expert, William Helfrick, although Gregorys income and expense declaration for 2001 stated that his income for that year was $700. The court noted that Gregory had health insurance costs of $470 per month in 2001.

For 2002, the trial court determined that earning capacity of $5,000 per month should be imputed to Gregory. This ruling was based upon the courts finding that Gregory had failed to make reasonable efforts to become employed, despite September 2001 and November 2001 orders to make reasonable efforts to find employment. The court examined Gregorys evidence of his job search and found that he had made only one application for employment in 2001 and in 2002.

The trial court further stated, Even if [Gregory] had submitted the number of applications that he apparently provided to Mr. Harper, it is incredibly unusual and not credible that not even a single interview would have resulted and that there were no substantive responses. Applying for work by sending letters or emails to prospective employers cannot simply be measured by the volume of the applications. It is very easy to send blanket emails or letters to employers. This is not an adequate measure of the sincerity and thoroughness of the effort to obtain employment. This Court believes that [Gregory], with a thorough and careful effort, could have obtained employment by the year 2002 and there were jobs available for him based upon his skills. [Gregory] has, however, not really demonstrated a willingness to be employed or self employed in a gainful manner . . . . The trial court also found that Gregory is often not a credible witness.

The trial court additionally determined that it would not be appropriate to accept the opinion of the accounting expert that in 2002 Gregory had income available for support of $2,364 per month, based on Gregorys financial records. The court stated, [Gregorys] explanation for the amounts moving in and out of his accounts was simply not credible. However, the Court does not feel it appropriate to simply utilize the figure found by the accountant, in view of the ability to earn of [Gregory] and his lack of compliance with the efforts to seek employment ordered by the Court.

For 2003, the trial court again determined that earning capacity of $5,000 per month should be imputed to Gregory in addition to the $1,227 in taxable income shown on his amended tax return. The court found that there was no credible evidence that Gregory actively sought employment in 2003, observing that he had only provided evidence of two job inquiries for the entire year.

For 2004, the trial court determined that Gregory had an earning capacity of at least $5,883 per month, which is in the mid-range of the amounts that both vocational evaluators found that [Gregory] was able to earn, based upon his skills and the jobs available. The court found that Gregory had not made a diligent job search effort in 2004, noting that his job search emails do not demonstrate a reasonable and consistent search for employment or self employment. Further, the court found that [b]ased on the evidence submitted, there were jobs available to [Gregory] had he diligently pursued them. Had he obtained one within a reasonable time after his alleged loss of employment, he could, by 2004, be either employed or self employed and earning approximately $70,000 per year, which is $5833 per month. The court additionally found that taking eight real estate classes in 2003 or 2004 does not represent a serious effort to retrain for a new career. It is a start at best if, in fact, it has happened.

The trial court did not rely upon the accounting experts report that Gregory had income of $2,998 per month in 2004 that was available for support, determining that Gregorys statement of assets and debts, his tax returns, and his loan documentation were inconsistent. The court found that the amounts listed on the tax returns did not all go through [Gregorys] bank accounts, at least the ones disclosed to the accountant expert. [Gregorys] explanations and the evidence he submitted seriously strain credibility. The best that can be said is that things just do not add up.

For 2005, the trial court determined that Gregory had an earning capacity of $6,667 per month, based on the opinions of the vocational experts that Gregory had the ability to earn approximately $80,000 per year. The court rejected Gregorys assertion that he had earned only $1,800 per month in 2005, noting that he listed monthly expenses of $5,100 on his April 29, 2005, income and expense declaration and monthly expenses of $4,124 on his July 14, 2005, income and expense declaration. Gregory also stated on his July 14, 2005, income and expense declaration that he had received loans totaling $211,500, which the trial court determined approximately equaled the amount of legal expenses that Gregory had not directly paid and thus those funds were not loans for living expenses. Further, the trial court found that Gregory had not listed any assets from which he could withdraw funds for living expenses. The court accordingly found that [a]t a minimum, therefore, it can be inferred and found that [Gregory] has available sufficient after tax dollars to pay at least $4,511 per month in actual expenses.

Based on the trial courts findings regarding the parties income and expenses, Gregory was ordered to pay Suzanne temporary spousal support of $444 per month commencing May 10, 2001. The court rejected the contention that Gregorys temporary spousal support obligation should be offset by the childrens Social Security benefits. Gregory was also ordered to pay temporary spousal support of $767 per month commencing January 1, 2002. For 2003, Gregory was ordered to pay temporary spousal support of $1,834 per month, commencing January 1, 2003. For 2004, Gregory was ordered to pay temporary spousal support of $1,160 per month, commencing January 1, 2004. Beginning January 1, 2005 to May 19, 2005, Gregory was ordered to pay temporary spousal support of $1,300 per month. The trial court further ordered that Gregory was entitled to a credit for any spousal support previously paid.

Permanent Spousal Support

Before making an award of permanent spousal support, the trial court made the following factual findings. The parties had a long marriage of over 10 years and have two teenage children. Suzanne, age 46, is totally disabled and unable to work due to a progressive form of multiple sclerosis and requires substantial assistance in her daily life. Her sisters are her conservators. In 2001, she incurred unreimbursed monthly health care expenses of approximately $2,552. In 2005, her monthly health care expenses had reached $6,952 per month. Suzanne has exhausted all of her assets and will not be able to work in the future, as stated in the credible testimony of Suzannes sister, Nancy Ellickson.

The trial court further found on the basis of Nancy Ellicksons testimony that the proceeds from the sale of the family residence in Sunnyvale will be exhausted to pay Suzannes obligations, including loan payments, property taxes, legal fees and loans from Suzannes mother for Suzannes care. Suzanne currently receives monthly Social Security benefits of $1,239. Based on the testimony of Robert La Porte, an employee of the Social Security Administration, the trial court determined that Suzannes Social Security benefits would be unaffected by an award of spousal support.

Additionally, the trial court found that the parties had a middle-class lifestyle during their marriage. Regarding Gregory, the trial court found that he was 49 years old and began working at the age of 18. His employment history includes work as the manager of the software library at Atari from 1981 to 1984 and in engineering and marketing at Xidex/Dysan from 1984 to 1987. In 1987, Gregory founded Tronix Peripherals, a company that manufactured disk drives and subsequently failed in 1993. In 1994, Gregory began working as a consultant through two companies, Marclyn Designs, Inc. and Chermark, Inc.

The courts findings regarding Gregorys income in 2000 through the first part of 2005, as stated with respect to temporary spousal support, were incorporated in the findings regarding permanent spousal support, including the finding that Gregory had an earning capacity of $80,000 per year at the time of trial. The trial court further found that [Gregory] is a bright and apparently talented individual. Even without the benefit of a college degree, he has been able to earn over $100,000 a year in the past. It is apparent that not all of [his] funds go or have gone through the bank accounts disclosed in this matter to the accountant.

The trial court also found that Suzanne accurately stated on her April 29, 2005 income and expense declaration that she has monthly expenses of $9,900, which include unreimbursed health care costs of $6,952. Suzanne lives with her mother, her only income is Social Security benefits, and she does not pay rent. Her assets have been exhausted. Gregorys July 14, 2005 income and expense declaration indicated monthly expenses of $4,511 for himself and the parties two children. Gregory is the primary custodial parent and the children are with Suzanne 20 percent of the time. There were no child care costs and child care did not impact Gregorys ability to work. In 2005, Gregory received Social Security benefits for the children of $330 per month for each child due to Suzannes disability. While Gregory represented that he had no substantial assets, the court found that he lacked credibility.

Based on these findings, the trial court determined that Gregory had the ability to pay Suzanne permanent spousal support of $1,600 per month, commencing May 19, 2005. The court also terminated its jurisdiction over the issue of spousal support for Gregory because he was able to support himself.

In so ruling, the trial court rejected Gregorys contention that his spousal support obligation should be offset by the support that Suzannes mother, Bette Perroton, provides to Suzanne. The court found that her mothers support did not constitute income to Suzanne. Also, the court was not persuaded that Family Code section 3910,[5] which provides that a parent has an obligation to support his or her adult child who is incapacitated and unable to earn a living, provided any basis for a reduction in Gregorys support obligation as the spouse of Suzanne.

Arrearages

The trial court recognized that its orders would create arrearages for both temporary and permanent spousal support, and ruled that the arrearages would accrue interest at the rate of 10 percent. Gregory was ordered to pay at least $200 per month towards the arrearages.

Judgment

Neither party filed objections to the statement of decision. Judgment was entered on April 5, 2006. The judgment orders Gregory to pay temporary spousal support and permanent spousal support as set forth in the statement of decision. Additionally, the judgment states that the total amount of temporary spousal support due is $54,574, less credit for spousal support previously paid during the relevant time period.

C. Analysis

Gregorys Contentions

On appeal, Gregory contends that the trial court erred in awarding temporary and permanent spousal support to Suzanne on the basis of imputed income, rather than his actual income, for two reasons. First, Gregory argues that his due process right was violated because he was not given notice that the trial court could impute income in accordance with a vocational experts opinion of his earnings capacity. Second, Gregory argues that the trial courts findings regarding his earning capacity are not supported by substantial evidence. Gregory also asserts that he is entitled to a set off for the value of room, board and care provided to Suzanne by her mother, Bette Perroton. We will begin our evaluation of Gregorys claims with a discussion of the applicable standard of review.

Standard of Review

Both temporary and permanent spousal support orders are reviewed under the abuse of discretion standard. (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 302 -304 (Cheriton); In re Marriage of Wittgrove (2004) 120 Cal.App.4th 1317, 1327.) However, an award of temporary spousal support is governed by different rules than an award of permanent spousal support.

Generally, temporary spousal support may be ordered in any amount based on the partys need and the other party's ability to pay. [Citations.] Whereas permanent spousal support provide[s] financial assistance, if appropriate, as determined by the financial circumstances of the parties after their dissolution and the division of their community property, temporary spousal support is utilized to maintain the living conditions and standards of the parties in as close to the status quo position as possible pending trial and the division of their assets and obligations. [Citations.] [Citations.] The court is not restricted by any set of statutory guidelines in fixing a temporary spousal support amount. [Citation.] (In re Marriage of Wittgrove, supra, 120 Cal.App.4th at p. 1327.)

In contrast, permanent spousal support is governed by the statutory scheme set forth in sections 4300 through 4360. Section 4330 authorizes the trial court to order a party to pay spousal support in an amount, and for a period of time, that the court determines is just and reasonable, based on the standard of living established during the marriage and taking into consideration the circumstances set forth in section 4320.[6] (Cheriton, supra, 92 Cal.App.4th at pp. 302-303;  4330, subd. (a).)[7] As this court stated in Cheriton, In making its spousal support order, the trial court possesses broad discretion so as to fairly exercise the weighing process contemplated by section 4320, with the goal of accomplishing substantial justice for the parties in the case before it. [Citation.] (Cheriton, supra, 92 Cal.App.4th at p. 304.)

It is well established that the trial court may consider a spouses earning capacity in determining spousal support. (Cheriton, supra, 92 Cal.App.4th at p. 301; In re Marriage of Ackerman (2006) 146 Cal.App.4th 191, 211.) To calculate earning capacity, the court must determine the income the spouse is reasonably capable of earning based upon the spouses age, health, education, marketable skills, employment history, and the availability of employment opportunities. (In re Marriage of Simpson (1992) 4 Cal.4th 225, 234; 4058, subd. (b).) However, there is no earning capacity where the ability to work or the opportunity to work is lacking . . . . (In re Marriage of Regnery (1989) 214 Cal.App.3d 1367, 1373.)

The trial courts decision to impute earnings to an unemployed or underemployed spouse is reviewed for abuse of discretion. (In re Marriage of Simpson, supra, 4 Cal.4th at p. 234.) However, the standard of review for the calculation of earning capacity is substantial evidence. (In re Marriage of Cohn (1998) 65 Cal.App.4th 923, 931.) Under that standard, we must consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the judgment. [Citations.] (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630.) It is not our task to weigh conflicts and disputes in the evidence; that is the province of the trier of fact. Our authority begins and ends with a determination as to whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, in support of the judgment. (Id. at pp. 630-631.)  Substantial evidence means such evidence as a reasonable fact trier might accept as adequate to support a conclusion; evidence which has ponderable legal significance, which is reasonable in nature, credible and of solid value.  (In re Marriage of Paboojian (1987) 189 Cal.App.3d 1434, 1438.) Accordingly, figures for earning capacity cannot be drawn from thin air; they must have some tangible evidentiary foundation. (In re Marriage of Cohn, supra, 65 Cal.App.4th at p. 931.)

Due Process Violation

Having determined the appropriate standards of review, we turn to Gregorys contention that his due process right was violated because he was not given notice that the trial court could impute income in accordance with a vocational experts opinion of the adequacy of his job search efforts. According to Gregory, the only notice he received was an employment efforts order that provided, The job seeker shall apply for not less than five jobs every two weeks . . . Failure to do so may result in imputation of income and/or criminal sanctions. Gregory therefore argues that the [employment efforts order] notifies the job seeker that the criterion for whether the court will impute income to him is simply the number of job applications he submits. (Underscore in original.) It does not give him fair notice that the adequacy of his job-search efforts will be later determined by the inference of an expert based on his annual earnings. For that reason, Gregory contends that the trial court improperly relied on the opinion of Cheryl Foden, Suzannes vocational expert, that his job search was not diligent and disregarded the number of job applications that he had submitted.

Suzanne points out that Gregory raises his claim of a due process violation for the first time on appeal, an observation that Gregory does not dispute. However, he asserts that an issue involving a due process violation is especially appropriate for review for the first time on appeal, citing Bonner v. City of Santa Ana (1996) 45 Cal.App.4th 1465, 1477, disapproved on other grounds in Katzberg v. City of Santa Ana (1996) 29 Cal.4th 300, 320. We need not determine whether Gregory failed to raise his due process claim in the proceedings below. Assuming that Gregory properly preserved his claim, we find no violation of due process.

The California Supreme Court has established that a litigant is entitled to due process in support proceedings, because [i]t is a fundamental concept of due process that a judgment against a defendant cannot be entered unless he was given proper notice and an opportunity to defend. [Citations.] (In re Marriage of Lippel (1990) 51 Cal.3d 1160, 1166.) In the present case, the record reflects that Gregory had pretrial notice that Suzanne sought the imputation of income and that expert opinion regarding the adequacy of his job search efforts would be presented at trial. Gregory stated in his trial brief that [Suzanne] seeks to have income imputed to [Gregory]. [] . . . [] [Gregory] intends to call Timothy Harper, a vocational expert, to testify regarding Gregorys earning capacity and the availability of work for [Gregory]. [Gregory] will present evidence of his efforts to find employment, [that] he was employed and that he paid spouse support to the best of his ability.

The record also reflects that Gregory had ample opportunity to defend. As he anticipated in his trial brief, Gregory called his own vocational expert, Timothy Harper, who gave his opinion regarding the adequacy of Gregorys job search efforts. Moreover, Gregorys attorney had the opportunity to cross-examine Suzannes vocational expert, Cheryl Foden, regarding her opinion that Gregorys job search efforts were not adequate. Therefore, because Gregory had both notice and an opportunity to defend against the imputation of income based on the inadequacy of his job search efforts, we determine that his due process claim lacks merit.

Imputation of Income

We next consider Gregorys contention that the trial court erred in determining that income should be imputed to him as an unemployed or underemployed supporting spouse. As Suzanne correctly asserts, the trial court imputed income based on the testimony of the parties vocational experts, who agreed that Gregory could obtain a job in 90 to 120 days and that it was highly unusual for a person not to receive a reply to any job application or to be unable to obtain a job after more than four years. Cheryl Foden also testified that because Gregory should be able to obtain a job paying an annual salary of $35,000 to $50,000 in short order, his failure to obtain such employment in the four and one-half years preceding the 2005 trial indicated inadequate job search efforts. Accordingly, the trial court did not abuse its discretion in implicitly finding that Gregory was underemployed and ruling that income should be imputed to him on the basis of his earning capacity as determined by the parties experts.

We are also not convinced by Gregorys alternate contention. He argues that, in the absence of evidence that he had the opportunity to work, consisting of a specific job opportunity at which he could earn the income imputed by the court, the trial court was required to calculate spousal support on the basis of his actual income. According to Gregory, Cheryl Fodens failure to identify any such specific job opportunity means there was insufficient evidence to support the trial courts calculation of temporary and permanent spousal support on the basis of his earning capacity.

In so arguing, Gregory has overlooked the burden of proof with respect to opportunity to work. The opportunity to work exists when there is substantial evidence of a reasonable likelihood that a party could, with reasonable effort, apply his or her education, skills and training to produce income. [Citation.] (In re Marriage of Smith (2001) 90 Cal.App.4th 74, 82.) The burden is on the supporting spouse to establish that no one was willing to hire him or her despite reasonable efforts to find work. (In re Marriage of Cohn, supra, 65 Cal.App.4th at p. 929; In re Marriage of LaBass & Munsee (1997) 56 Cal.App.4th 1331, 1339.)

Thus, the burden was on Gregory to show that he did not have the opportunity to work because, despite his reasonable efforts, no employer was willing to hire him. Gregory did not meet this burden because he presented no evidence of employers who were unwilling to hire him. Moreover, his own vocational expert, Timothy Harper, stated that Gregory reasonably could earn an annual income of $35,000 to $50,000 after six months of maximum good faith effort to find a job, and that the high end of his earning capacity was $80,000. Additionally, Suzannes expert, Cheryl Foden, stated that positions in the both salary ranges were available in the period of 2000 through 2004, based on her labor market job research. Because both parties vocational experts agreed that Gregory could find a job paying $35,000 to $50,000, with a high end of $80,000, substantial evidence supports the trial courts calculation of spousal support on the basis of Gregorys earning capacity.

Furthermore, we find no merit in Gregorys contention that the trial court was required to calculate spousal support on the basis of his actual income as shown on his federal income tax returns. The general rule is that income shown on recent income tax returns is presumptively correct. (In re Marriage of Loh (2001) 93 Cal.App.4th 325, 332.) However, the presumption may be rebutted. (In re Marriage of Calcaterra & Badakhsh (2005) 132 Cal.App.4th 28, 34.) Thus, where there was a huge discrepancy between the income stated by a father on his tax returns, his loan applications, his income and expense declarations, and in his testimony, the appellate court determined that the trial court was not required to accept the statement of income on his tax returns. (Id. at p. 35.)

The present case is similar. Gregory does not dispute the trial courts finding that there was a discrepancy between the income stated on his tax returns, his income and expense declarations, and his stated income, expenses, and loans. As the trial court noted, The best that can be said is that things just do not add up. Accordingly, the presumption that Gregorys income tax returns correctly indicated his income was rebutted and the trial court was not required to base its spousal support calculation on Gregorys income as stated in his federal income tax returns.

For these reasons, the trial court did not abuse its discretion in imputing income to Gregory and substantial evidence supports the courts calculation of his earning capacity. (In re Marriage of Simpson, supra, 4 Cal.4th at p. 234; In re Marriage of Cohn, supra, 65 Cal.App.4th at p. 931.)

Offset for Support Provided by Suzannes Mother

Finally, we agree with the trial court that Gregory was not entitled to a set off for the value of the support provided to Suzanne by her mother, Bette Perroton, because such support does not constitute income for purposes of calculating spousal support. Gregory argues that since Suzannes mother is providing room, board and care pursuant to section 3910, subdivisions (a) and (b),[8] because Suzanne is her incapacitated adult child, his spousal support obligation should be reduced. He relies on the decisions in Stewart v. Gomez (1996) 47 Cal.App.4th 1748 and County of Kern v. Castle (1999) 75 Cal.App.4th 1442 for the proposition that a parents income for purposes of child support includes the value of free housing, and maintains that the same rule should apply to spousal support.

Suzanne responds that the decisions in Stewart v. Gomez, supra, 47 Cal.App.4th 1748 and County of Kern v. Castle, supra, 75 Cal.App.4th 1442 make clear that the court has the discretion to consider free housing in calculating support, but is not required to do so. In Stewart v. Gomez, supra, 47 Cal.App.4th at page 1755, the appellate court ruled that if a father received free housing as a part of his employment, the trial court could, in its discretion, include the reasonable value of such housing as income under section 4058, subdivision (a)(3).[9] In County of Kern v. Castle, supra, 75 Cal.App.4th at page 1451, the appellate court determined that the trial court could have discretionarily considered as income the mortgage-free housing [the father] was living in because he paid the mortgage off with part of the proceeds from his inheritance. This constituted a reduction in living expenses like that in the Stewart [v. Gomez, supra, 47 Cal.App.4th 1748] case.

As Suzanne correctly points out, this court has determined that with respect to child support, [u]nder the plain language of section 4058, the courts ability to consider house benefits as income is limited to cases involving employment-related housing benefits. (In re Marriage of Schlafly (2007) 149 Cal.App.4th 747, 758 (Schlafly.) Suzannes free housing is obviously not employment-related. However, the issue of whether a supported spouses housing benefits could be considered as income was not addressed in Schlafly, Stewart, or Gomez, which only concerned child support. Moreover, section 4320, which specifies the circumstances that the court may consider in ordering permanent spousal support, does not expressly provide that the court has the discretion to consider a spouses housing benefit.

Even assuming that the trial court has the discretion to consider the supported spouses free housing under section 4320, because subdivision (e) provides that the trial court may consider [t]he obligations and assets, including the separate property, of each party, while subdivision (n) provides that the court may also consider [a]ny other factors the court determines are just and equitable, we believe that consideration of the support provided by Suzannes mother is unwarranted under the circumstances of this case.

The support provided by a parent to an incapacitated adult child pursuant to section 3910 is not intended to reduce a supporting spouses obligation to an incapacitated supported spouse. It is well established that section 3910 was enacted to reduce the financial burden on the public: The statute has its roots in Elizabethan poor law from almost 400 years ago and has been a part of California law since the Civil Code was adopted in 1872. [Citation.] Its imposition upon parents of a duty to support their child continues even after the child reaches the age of majority, on the rationale of protecting the public from the financial burden of supporting an individual whose parents are able to provide the requisite support. [Citation.] (Jones v. Jones (1986) 179 Cal.App.3d 1011, 1014.)

Thus, in In re Marriage of Drake (1997) 53 Cal.App.4th 1139, 1154, the court rejected a fathers contention that his obligation to support his disabled adult son under section 3910 was discharged because the mother had set up a trust for their sons support. Similarly, in Chun v. Chun (1987) 190 Cal.App.3d 589, 596 a father could not avoid his support obligation under Civil Code section 206 (the predecessor statute to section 3910) because his disabled daughter was fully supported by her mother. From these decisions, we infer that a parents support of an incapacitated adult child pursuant to 3910 does not necessarily reduce the obligation of the adult childs spouse to pay spousal support, because the intent of section 3910 is to protect the public from the financial burden of supporting the incapacitated person.

We therefore determine that the trial court did not err in declining to consider the support provided by Suzannes mother as income in determining Gregorys spousal support obligation. However, we emphasize that our ruling is limited to the facts of this case, and we do not establish a general rule that the court may never consider the parental support provided to a party under section 3910 in determining the other partys spousal support obligation.

For these reasons, we conclude that the trial court did not abuse its discretion in making its awards of temporary and permanent spousal support to Suzanne.

II. Child Support

In his trial brief, Gregory requested an award of child support from the date of separation in light of Suzannes income from Social Security, rental of the family residence, her interest in a mini-storage unit, and her mothers support. Suzanne, in her trial brief, requested an award of child support retroactive to May 10, 2001.

A. Trial Evidence Pertaining to Child Support

The trial evidence relevant to the trial courts ruling on child support included the evidence set forth above with respect to spousal support.

B. Statement of Decision and Judgment

In its statement of decision, the trial court found that there were two minor children and that they spend approximately 20 percent of their time with their mother, Suzanne, while Gregory is the primary custodial parent. For purposes of calculating child support, the court determined that Gregorys actual net income was $4,511 per month, rather than imputing income of $6,667 per month. The trial court accordingly calculated that under the guidelines,[10] Gregory should pay Suzanne guideline child support of $544 per month.

However, the court determined that a deviation from the guideline was appropriate due to the unusual aspects of the case, including the childrens monthly Social Security payment of $660 per month that Gregory receives. The trial court awarded Suzanne child support of $300 per month, which includes $100 per month for the oldest child and $200 per month for the youngest child. The trial court rejected Gregorys contention that it was not in the best interests of the child to require the custodial parent to pay child support to the parent with the lesser amount of time share.

No party filed an objection to the statement of decision. The judgment entered April 5, 2006, includes the award of child support as set forth in the statement of decision.

C. Analysis

Gregorys Contentions

On appeal, Gregory contends that the trial court erred in calculating child support on the basis that he had a net income of $4,511 per month, rather than his actual income of $1,858 per month. Gregory also asserts that he is entitled to an offset for the value of room, board and care provided to Suzanne by her mother.

Standard of Review

We review an award of child support under the abuse of discretion standard. (Cheriton, supra, 92 Cal.App.4th at p. 282.) However, we review the trial courts findings with respect to a parents actual income to determine if the findings are supported by substantial evidence. (In re Marriage of Schulze (1997) 60 Cal.App.4th 519, 529.)

Statutes and Public Policy Governing Child Support

The statutes and public policy governing the calculation of child support awards and the related determination of parental income were outlined by this court in Cheriton, supra, 92 Cal.App.4th at pages 283-284. California has a strong public policy in favor of adequate child support. [Citations.] That policy is expressed in statutes embodying the statewide uniform child support guideline. (See [] 4050-4076.) The guideline seeks to place the interests of children as the states top priority. ( 4053, subd. (e).) In setting guideline support, the courts are required to adhere to certain principles, including these: A parents first and principal obligation is to support his or her minor children according to the parents circumstances and station in life. ( 4053, subd. (a).) Each parent should pay for the support of the children according to his or her ability. ( 4053, subd. (d).) (Ibid., fn. omitted.) Parental income is broadly defined for the purpose of calculating child support under the statutory guidelines. (Cheriton, supra, 92 Cal.App. 4th at p. 285.)

Actual Income

Gregory contends that there was not substantial evidence to show that his monthly income in 2005 was greater than $1,858, as stated in his July 14, 2004, income and expense declaration. We disagree.

The trial court determined that Gregorys actual income was $4,511 per month, stating, In addition to finding that [Gregory] has the ability to earn at least the sum of $6,667 per month . . . the Court finds, based upon the evidence, that [Gregory] actually does have funds available for support of at least $4,511 per month net. The evidence the court relied upon was described as follows in the statement of decision:

On the later Income and Expense Declaration, filed on July 14, 2005, [Gregory] lists expenses of $4,124 for the last 12 months and states that his rent has increased to $1750 from $1,363, which would bring the total expenses to $4,511 per month. [Gregory] has stated under oath that he is working 30 to 50 hours per week and asserts that he is earning only $1,858 per month as a consultant. In addition, on this form, he lists a number of alleged loans, but does not state the purpose of these loans. The loans total $211,500. . . . [I]f one examines the amounts paid in legal expenses listed by [Gregory], it equals $246,229, of which he asserts that he paid directly the sum of $35,169. The difference equals approximately $211,060, which is remarkably close to the amount of the loans asserted. Thus, the loans were not apparently for living expenses. At a minimum, therefore, it can be inferred and found that [Gregory] has available sufficient after tax dollars to pay at least $4,511 per month in actual expenses. There are no assets shown on the form from which [Gregory] states he is able to withdraw funds for living expenses. The tax returns submitted by [Gregory] are inconsistent with his own sworn declarations. Based upon all of the evidence and findings, the Court finds that [Gregory] has the sum of at least $4,511 per month net or nontaxable income available for support in 2005.

We reiterate that when the findings of the court are challenged for sufficiency of the evidence, our power begins and ends with a determination as to whether there is any substantial evidence to support them; that we have no power to judge . . . the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom. (In re Marriage of Martin (1991) 229 Cal.App.3d 1196, 1200.)

Applying this standard, we determine that the trial court could reasonably infer from the evidence that Gregory had a source of actual income in 2005, in addition to his stated monthly income of $1,858, from which he was paying a large portion of his monthly expenses of $4,511. While Gregory asserted that he paid the expenses in excess of his actual monthly income of $1,858 by obtaining loans from family and friends, the trial court calculated that the amount of the loans Gregory had received approximately equaled his attorney fees, less amounts that he had paid from his own funds. Therefore, the loans listed by Gregory were insufficient to cover his monthly expenses in addition to his attorney fees and it may be reasonably inferred that he had another source of income from which the majority of his monthly expenses were paid.

Offset for Support Provided by Suzannes Mother

Gregory also argues that the support provided to Suzanne by her mother pursuant to section 3910 must be considered Suzannes income for the purpose of calculating child support. For several reasons, we are not convinced by his argument.

First, with regard to child support, subdivision (b) of section 3910 expressly provides that Nothing in this section limits the duty of support under Sections 3900[11] and 3901.[12] Thus, we do not read section 3910 to authorize reduction of a parents child support obligation because the other parent is an incapacitated adult child who is receiving support from his or her parent pursuant to section 3910.

Second, as we have discussed in connection with the issue of spousal support, section 4058 does not authorize consideration of a parents non-employment related free housing as income for purposes of child support. Section 4058, subdivision (a)(3), provides that in the courts discretion a parents gross income for purposes of child support may include employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses, and other relevant facts. We reiterate this courts ruling in Schlafly, supra, 149 Cal.App.4th at page 758, that [u]nder the plain language of section 4058, the courts ability to consider house benefits as income is limited to cases involving employment-related housing benefits. It cannot be disputed the support provided to Suzanne by her mother pursuant to section 3910 is not employment-related. Thus, Gregory misplaces his reliance on the decisions in Stewart v. Gomez, supra, 47 Cal.App.4th 1748 and County of Kern v. Castle, supra, 75 Cal.App.4th 1442 for his contention that the value of the support provided by Suzannes mother should reduce his child support obligation.

For these reasons, we determine that the trial court did not abuse its discretion awarding child support of $300 per month to Suzanne. (Cherit