Marriage of Uffelman

Filed 9/29/08 Marriage of Uffelman 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

I. INTRODUCTION

In this marital dissolution action, appellant Craig C. Uffelman challenges the trial courts order of September 14, 2007, requiring him to pay temporary spousal support of $6,907 per month to respondent Jeannine Black Uffelman and temporary child support of $2,690 per month. Craig[1] argues that the trial court erred in basing the support awards on the finding that he has a monthly income of $29,416, which includes his base salary of $6,500 per month and his bonus income. According to Craig, his future bonus income is unpredictable, and therefore the trial court should have (1) considered only his base salary in calculating his monthly support obligation; and (2) ordered him to pay Jeannine and the parties minor child a fixed percentage of his future bonuses when he receives them, pursuant to the decision in In re Marriage of Ostler & Smith (1990) 223 Cal.App.3d 33 (Ostler & Smith).

For the reasons stated below, we determine that the trial court did not abuse its discretion in awarding temporary spousal support and temporary child support, and therefore we will affirm the order.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Background

Craig and Jeannine were married on July 4, 1995, and have a son, August, who was born in 1996. After being married for over ten years, the couple separated on September 4, 2005. A few weeks later, on September 29, 2005, Craig filed a petition for dissolution of marriage. The parties share legal custody of August, who resides with Jeannine, while Craig has a visitation schedule as set forth in the February 14, 2007 stipulation and order.

The present dispute began on October 18, 2006, when Jeannine filed an application for an order to show cause in which she requested, among other things, temporary spousal support and guideline child support. In his responsive declaration, Craig consented to guideline child support but disputed Jeannines request for monthly spousal support on the ground that she had sufficient funds due to her withdrawals from the parties joint checking account and line of credit.

B. Hearing of August 14, 2007

A hearing date of August 14, 2007, was set on the support issue. Both parties submitted pretrial statements. Craig sought an order for spousal and child support that took into account the variable nature of his income, which included an annual base salary of $72,000 plus bonuses and stock awards. In particular, Craig urged the trial court to omit his unpredictable bonus income when the court determined his net disposable income for the purpose of calculating support. He asked that his bonus income be instead subject to an order pursuant to Ostler & Smith, supra, 223 Cal.App.3d 33, whereby he would pay Jeannine a fixed percentage of his after-tax bonus income for spousal and child support within five days of receiving the bonus. Jeannine noted, in her pretrial statement, that the parties had asked their joint accounting expert to provide an opinion regarding Craigs request for an Ostler & Smith order.

The only witness to testify at the August 14, 2007 hearing was the parties joint accounting expert, Stephen Reiss, who also provided four letter reports that were admitted into evidence. Reiss testified that Craig is employed a field vice president for Ameriprise Financial Services, Inc. Craigs compensation package is so complex that it is described in a 15-page company document. In brief, Craigs compensation package includes four components: (1) a base salary of $78,000; (2) restricted stock awards; (3) quarterly bonuses; and (4) an annual leadership bonus. Craig does not have any control over the amount of bonuses and stock that he receives.

Excluding the restricted stock awards, and including only base salary and bonuses, Craigs average annual gross income for the years 2003 through 2006 was $353,000. Craigs tax returns show that his income has been relatively stable. He earned (excluding stock awards) gross annual income of $327,970 in 2003; $341,578 in 2004; $384,101 in 2005; and $361,606 in 2006. At the time of the August 24, 2007 hearing, Craig had received gross income to date of $509,165, which included $128,000 in restricted stock awards, base salary of $48,000, and the remainder in bonus income. Reiss estimated that Craigs gross annual income in 2007, less restricted stock awards, would total approximately $500,000.

As stated in his letter report of August 2, 2007, Reisss opinion was that Craigs cumulative annual cash flow is sufficient to cover, on a monthly basis, the maximum support amount that [Jeannines attorney] has been requesting, except for perhaps the first month or so of each year. Reiss understood that Jeannine was requesting maximum support payments of $13,000 per month. He noted that the parties had previously coped with the financial shortfalls that occurred, due to Craig receiving a large portion of his income in periodic bonus payments, by using a line of credit. He believed that if Craigs support obligation exceeded his base salary, Craig could utilize the line of credit in the same way to cover the shortfall.

C. The Trial Courts Order

The trial court issued its order after hearing on the issues of temporary child support, temporary spousal support and attorneys fees on September 14, 1007. The order included several factual findings, as follows.

The trial court found that Craig receives three types of compensation: a base salary of $78,000 annually; varying amounts of performance-based bonuses, and awards of restricted stock. There are two types of bonuses, an Annual Incentive Award and an Annual Leadership Bonus. Each bonus is performance based and the amount of any bonus is not known until it is disbursed. Craig also receives awards of restricted stock that vest over time. To date, he has not sold any of the vested stock.

As to earnings, the trial court determined that Craig earns $29,416 per month while Jeannine earns $3,000 per month. The court further found that [d]uring the marriage, the parties utilized a line of credit to compensate for [Craigs] uneven flow of income. The parties would withdraw funds from the line of credit when necessary, but then repay the loan when [Craig] received bonuses. This created a more consistent income stream. The trial court additionally determined that Craig had a 14 percent timeshare with the parties minor child.

The order also includes several rulings. First, the Court finds that using the historical average of [Craigs] yearly income, excluding the stock awards, is most appropriate for the purposes of computing temporary child support and temporary spousal support. Creating a consistent temporary support award more closely represents the status quo of the parties as a couple. During the marriage, the irregularity of [Craigs] income did not affect the parties finances because they used the line of credit as a cushion. This temporary support order is designed to maintain the financial consistency that the parties created during their marriage.

Second, the trial court declined to award a percentage of Craigs bonus payments as temporary support pursuant to Ostler & Smith, supra, 223 Cal.App.3d 33. While the court acknowledged that Craigs base salary might not be sufficient to pay the temporary support owed during the first month of the year, the court determined that an Ostler & Smith order would be more appropriate for permanent support. Also, the court found that Craig could manipulate his finances in a way to make certain he has sufficient funds to cover these temporary orders.

Third, the trial court excluded the restricted stock awards from its calculation of temporary support, because the stock was first awarded in 2006 and therefore it had no effect on the martial status quo. Also, the parties agreed that a portion of the stock is community property and Craig had not realized any income from the stock since it had not been sold.

Based on these rulings and its factual findings, the trial court ordered that Craig to pay temporary spousal support of $6,907 and temporary child support of $2,690 per month, retroactive to November 1, 2006.

III. DISCUSSION

On appeal, Craig argues that the trial court abused its discretion in awarding temporary spousal support and temporary child support. We will begin our analysis by addressing that portion of the trial courts order requiring Craig to pay temporary spousal support of $6,907 per month.

A. Temporary Spousal Support

An award of temporary spousal support is governed by different rules than an award of permanent spousal support. Temporary spousal support is authorized by section 3600, which provides in pertinent part, During the pendency of any proceeding for dissolution of marriage . . . the court may order (a) the husband or wife to pay any amount that is necessary for the support of the wife or husband . . . .

Thus, 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 (2004) 120 Cal.App.4th 1317, 1327 (Wittgrove.)

The amount of a temporary spousal support award will be reversed only upon a clear showing of abuse of discretion. (In re Marriage of Dick (1993) 15 Cal.App.4th 144, 165; In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 312 (Cheriton.) [I]n exercising its broad discretion, the court may properly consider the big picture concerning the parties assets and income available for support in light of the marriage standard of living. (Wittgrove, supra, 120 Cal.App.4th at p. 1327.)

Here, Craig asserts that the trial court abused its discretion because the temporary support award of $6,907 per month exceeds his ability to pay the award from his base monthly salary of $6,500. While Craig does not dispute the trial courts finding that he receives additional bonus income that must be considered in awarding temporary spousal support, he disagrees with the trial courts inclusion of his bonus income in his average monthly income and the finding that he earns $29,416 per month. Craig insists that his ability to pay monthly temporary spousal support is limited to his base monthly salary and Jeannine should receive a fixed percentage of his after-tax bonus income when a bonus is received, pursuant to Ostler & Smith, supra, 223 Cal.App.3d 33, because his bonus income is sporadic and unpredictable.

Jeannine argues to the contrary that the trial court did not abuse its discretion in basing the award of temporary spousal support on a finding that Craigs monthly income is $29,416, because the court relied upon the testimony of the parties joint accounting expert, Stephen Reiss, in determining Craigs income. Jeannine emphasizes Reisss opinion that Craig had the ability to pay up to $13,000 per month for temporary spousal support and temporary child support, except perhaps for the first month of the year when Craig could utilize his line of credit to cover the shortfall. Further, Jeannine asserts that that an order pursuant to Ostler & Smith, supra, 223 Cal.App.3d 33 is discretionary, not mandatory.

We agree with Jeannine that the trial court was not required to calculate the amount of monthly temporary spousal support solely on the basis of Craigs base salary of $6,500 per month or to issue an Ostler & Smith order requiring Craig to pay her a fixed percentage of his bonus income. The decisions on which Craig relies, including Ostler & Smith, supra, 223 Cal.App.3d 33, and In re Marriage of Rosen (2002) 105 Cal.App.4th 808, do not address an award of temporary spousal support or otherwise support his contention that an Ostler & Smith order is required under the circumstances of this case.

In Ostler & Smith, the trial court ordered the husband to pay $3,000 per month in permanent spousal support, plus 15 percent of his annual gross cash bonus when the bonus was received. (Ostler & Smith, supra, 223 Cal.App.3d at p. 42.) The appellate court rejected the husbands argument that payment of a fixed percentage of his future bonus income as additional spousal support would exceed his wifes needs, finding that the trial court had properly exercised its discretion after considering the statutory criteria for an award of permanent spousal support. (Id. at p. 50.)

In In re Marriage of Rosen, supra, 105 Cal.App.4th 808, the appellate court found that the trial court had made an erroneous calculation of the husbands monthly income when it ordered permanent spousal support. The trial court found that the husband, a self-employed attorney with a fluctuating income, earned $13,500 per month, but the appellate court determined that the evidence showed that his monthly income for the pertinent time period was actually $7,695. (Id. at pp. 824-825.)

Thus, the decisions in Ostler & Smith, supra, 223 Cal.App.3d 33, and In re Marriage of Rosen, supra, 105 Cal.App.4th 808, did not address the issue of whether the trial court must order payment of a fixed percentage of a supporting spouses bonus income when calculating temporary spousal support. At most, these cases are authority for the proposition that an order to pay a fixed percentage of uncertain future earnings as permanent spousal support is permissible, but not mandatory. In In re Marriage of Kerr (1999) 77 Cal.App.4th 87, 95, the appellate court observed in the context of permanent spousal support that [g]enerally, the use of percentages to determine support will beneficially remove the need for further litigation and its attendant costs, and oftentimes, emotional upheaval. However, in the context of temporary support, as Jeannine points out, the use of percentages to determine support will not necessarily reduce the need for future litigation because the litigation of support issues is ongoing.

We also believe that imposing a requirement that the supporting spouses bonus income be subject to an Ostler & Smith order would be contrary to the well-established rule that the trial court has broad discretion in ordering temporary spousal support. (Wittgrove, supra, 120 Cal.App.4th at p. 1327.) Accordingly, we find that the trial court did not abuse its discretion in declining Craigs request that he be required to pay a fixed percentage of his after-tax bonus income as a portion of his temporary spousal support obligation pursuant to Ostler & Smith, supra, 223 Cal.App.3d 33.

Craigs contention that he does not have the ability to pay temporary spousal support of $6,907 per month does not alter our conclusion. We recognize that the trial courts discretion in awarding temporary spousal support is circumscribed by the supported spouses needs and the supporting spouses ability to pay. (In re Marriage of Murray (2002) 101 Cal.App.4th 581, 594.) However, in this case Craig does not raise any issue with respect to Jeannines needs. As to Craigs ability to pay, the trial courts finding that Craig has the ability to pay temporary spousal support of $6,907 per month was based upon the testimony of Stephen Reiss, the parties joint accounting expert. Reiss testified that, for purpose of calculating support, Craigs average gross annual income for the years 2003, 2004, 2005 and 2006 was $353,000 and his estimated income for 2007 was $500,000. When divided by 12, an average gross annual income of $353,000 produces an average gross monthly income of $29,416, which the trial court accordingly found was Craigs average gross monthly income. The trial courts finding was therefore supported by substantial evidence. (In re Marriage of Dick, supra, 15 Cal.App.4th at p. 160 [finding that husband had ability to pay temporary spousal support conclusive where supported by substantial evidence].)

The decision in In re Marriage of Riddle (2005) 125 Cal.App.4th 1075, on which Craig relies, does not compel a different result regarding Craigs ability to pay temporary spousal support. In that case, the trial court ordered the husband, a commissioned financial advisor, to pay temporary spousal support of $4,338 per month plus 20 percent of any income in excess of $21,950 per month. (Id. at p. 1078.) The appellate court ruled that the trial court had abused its discretion because its determination of the husbands monthly income was based upon only two months of income, stating, It is a manifest abuse of discretion to take so small a sliver of time to figure income that the determination essentially becomes arbitrary. (Id. at pp. 1078, 1083.) Here, in contrast, the trial court based its determination of Craigs monthly income and his ability to pay upon approximately four and one-half years of documented income and the opinions of the parties joint accounting expert.

For these reasons, we conclude that the trial court did not abuse its discretion in ordering Craig to pay temporary spousal support of $6,907 per month.

B. Child Support

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

Craig contends that the trial court abused its discretion because he does not have the ability to pay temporary child support of $2,690 per month. He argues, as he did with respect to temporary spousal support, that his base monthly salary of $6,500 is insufficient and the trial court should have imposed a Smith & Ostler order requiring him to pay a fixed percentage of his bonus income when it is received, rather than including his bonus income in his monthly income for the purpose of calculating child support. Craig also argues that the trial court erred in finding that his past bonus income is a reasonable predictor of his future bonus income, since his future bonus income is arbitrary and capricious, subject to the whims of the employer and the economy, and therefore unpredictable. Jeannine responds that the trial courts order was properly based upon the opinion of the parties joint accounting expert that Craigs income was sufficient to pay both temporary child support and temporary spousal support, up to a maximum of $13,000 per month.

In reviewing an award of child support, we are mindful of the statutes and public policy governing the calculation of child support awards, and the related determination of parental income, as 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.)

The formula for guideline child support, set forth in section 4055, requires the court to determine the net disposable income of the parents. ( 4055, subd. (b)(1)(E); County of Placer v. Andrade (1997) 55 Cal.App.4th 1393, 1395-1396 (Andrade).) Net disposable income is generally determined by subtracting the deductions permitted by section 4059 from the parents annual gross income. As defined by statute, annual gross income expressly includes income from whatever source, including bonuses. ( 4058, subd. (a)(1); Andrade, supra, 55 Cal.App.4th at pp. 1395-1396.) The assumption underlying these calculations is that past income is a good measure of the future income from which the parent must pay support. (Id. at p. 1396.)

The fact that income may be sporadic does not justify excluding such income from the calculation of guideline child support. (Cheriton, supra, 92 Cal.App.4th at p. 287.)  The court cannot deduct predictable overtime and bonuses in determining [a parents] prospective earnings merely because they occur sporadically. (Ibid.) Thus, bonus income may be excluded from the calculation only where the court determines that the parent is unlikely to receive bonuses in the future. (Andrade, supra, 55 Cal.App.4th at p. 1396.)

The trial court is also required to calculate a parents monthly net disposable income by dividing the annual net disposable income by 12. ( 4060.) If the monthly net disposable income does not accurately reflect the actual or prospective earnings of the parties at the time the determination of support is made, the trial court may adjust the amount appropriately. ( 4060; Cheriton, supra, 92 Cal.App.4th at p. 287; Andrade, supra, 55 Cal.App.4th at p. 1396.) In addition, trial courts have discretion to adjust the child support order as appropriate to accommodate seasonal or fluctuating income. ( 4064.) (Cheriton, supra, 92 Cal.App.4th at p. 287.)

In the present case, as we discussed in Part A, above, with respect to temporary spousal support, substantial evidence supports the trial courts finding that Craigs gross monthly income is $29,416, a figure that includes both base salary and bonuses, and therefore he has the ability to pay temporary child support of $2,690 in addition to temporary spousal support of $6,907. The court properly included Craigs bonuses in calculating his gross annual income because there was no evidence that Craig was unlikely to receive any bonuses in the future. (Andrade, supra, 55 Cal.App.4th at p. 1397.) Moreover, Craig has provided no authority for the proposition that payment of a percentage of a parents bonus income as temporary child support, pursuant to Ostler & Smith, supra, 223 Cal.App.3d 33, is mandatory.

We are also not persuaded by Craigs contention that his past income is not a predictor of his future income. Although the parties joint expert estimated that Craigs annual income for 2007 would total approximately $500,000, a substantial increase over the previous four-year average of $353,000, Craig claims that his bonus income is likely to fall in the future due to market conditions. He provided no evidence at the time of trial, however, to support this claim, or to show that his future gross annual income would drop below the four-year average.

For these reasons, we conclude that the trial court did not abuse its discretion in ordering Craig to pay temporary child support of $2,690 and declining Craigs request for an order requiring him to pay a fixed percentage of his bonus income when it is received, rather than including his bonus income in his monthly income for the purpose of calculating guideline child support.

IV. DISPOSITION

The September 14, 2007 order after hearing re temporary child support and spousal support is affirmed. Costs on appeal are awarded to respondent.

_______________________________________________________

Bamattre-Manoukian, ACTING P.J.

WE CONCUR:

__________________________

MIHARA, J.

_________________________

MCADAMS, J.

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[1] Hereafter, we will refer to the parties by their first names for purposes of clarity and not out of disrespect. (See Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1136, fn. 1.)