Opinion
D074438
02-04-2020
In re the Marriage of PAULA K. and LEWIS H. ABULAFIA. PAULA K. ABULAFIA, Respondent, v. LEWIS H. ABULAFIA, Appellant.
Moore, Schulman & Moore, Erik S. Moore, Lindsey A. Dentino and Brittany P. Dracup for Appellant. Linda Cianciolo for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. DN142186) APPEAL from an order of the Superior Court of San Diego County, Kelly C. Mok, Judge. Affirmed. Moore, Schulman & Moore, Erik S. Moore, Lindsey A. Dentino and Brittany P. Dracup for Appellant. Linda Cianciolo for Respondent.
I.
INTRODUCTION
Appellant Lewis Abulafia appeals from a postjudgment order of the trial court denying his request to modify or terminate an order for spousal support that was entered pursuant to a stipulated marital settlement agreement (MSA) between the parties in 2007. In that stipulated agreement, Lewis agreed to pay his former spouse Paula Abulafia spousal support in the amount of $2,500 per month from August 1, 2007 through July 31, 2012; as of August 1, 2012, the amount of spousal support would increase to $3,000 per month "[t]o address [Paula's] retirement." The court incorporated the parties' stipulated MSA into a judgment in 2008.
In July 2017, Lewis moved to terminate or modify spousal support. After conducting a hearing over several days, the trial court denied Lewis's request to terminate or modify spousal support. The court concluded that Lewis had not demonstrated sufficient changed circumstances to warrant either termination or modification.
Lewis contends that the trial court erred as a matter of law in failing to terminate spousal support pursuant to Family Code section 4322, which provides that spousal support shall not be continued where the supported spouse has acquired a separate property estate that is sufficient for that party's "proper support." Lewis asserts that the trial court erred in the manner in which it addressed the issue of changed circumstances by failing to adequately address the real issue, as he views it, which is "the sufficiency of [Paula's] separate estate as required under Family Code section 4322." He also challenges the trial court's implicit conclusion that Paula's separate estate is not sufficient for her proper support, and suggests that the court failed to take into account various sources of income that it should have attributed to Paula.
Further statutory references are to the Family Code unless otherwise indicated.
We find no merit to Lewis's contentions on appeal, and therefore affirm the postjudgment order of the trial court denying his request to terminate or modify spousal support.
II.
FACTUAL AND PROCEDURAL BACKGROUND
Lewis and Paula were married for almost 36 years, until they separated in 2006. In 2002, prior to the separation, Lewis became fully disabled and began receiving lifetime monthly nontaxable income of $6,600 through a UNUM disability insurance policy that had been purchased with community funds during the marriage. In addition, during the marriage, Paula had inherited $450,000, which was her separate property. Paula estimated that out of this $450,000, she had commingled some portion of it and was left with $280,000 in separate property at the time the parties divided their assets.
On September 20, 2007, the parties executed a stipulated MSA that addressed property and support issues. The trial court incorporated the MSA into the judgment of dissolution, effective March 12, 2008. Pursuant to the MSA, the parties divided their assets and liabilities equally. The community assets that the parties divided totaled over two million dollars, of which approximately $1.4 million were retirement funds. Paula paid Lewis an equalizing payment of $37,001. At the time of the dissolution, Paula's separate property estate had a value of approximately $280,000 more than Lewis's separate property estate, due to what remained of a separate property inheritance.
The parties agreed that Lewis would receive, as his separate property, the $6,600 per month payments made on the disability policy that the couple had purchased during their marriage.
At the time the parties entered into the MSA, they were both over the age of 59 1/2. Thus, both parties were of an age at which they could voluntarily withdraw funds from their retirement accounts without penalty. In addition, both parties were receiving an equal portion of Lewis's military retirement benefits. Paula was still working at the time the MSA was entered and was earning $3,070 per month.
Pursuant to the MSA, Lewis would pay Paula $2,500 per month in spousal support, beginning August 1, 2007. As of August 1, 2012, Lewis was to pay Paula $3,000 per month, "[t]o address Wife's retirement." The spousal support was designated as being nontax-deductible to Lewis and tax free to Paula. Lewis's obligation to pay spousal support to Paula would terminate upon the first of the following to occur: (1) Lewis's death, (2) Paula's death, (3) Paula's remarriage, or (4) further order of the court.
In his request to modify or terminate or modify spousal support, Lewis described his payment of spousal support to Paula as "shar[ing] [his] disability [policy] money with Paula."
The parties stipulated that the support provisions were based on the following facts and circumstances:
"(1) Husband has no earned income.
"(2) Husband's unearned taxable income is $965.00 per month.
"(3) Husband's unearned tax-free income is $8,511.00 per month.
"(4) Husband's federal tax filing status is Single.
"(5) Husband claims one dependency exemption.
"(6) Wife's W-2 (earned) income is $3,070.00 per month.
"(7) Wife's unearned taxable income is $2,569 per month.
"(8) Wife's federal tax filing status is Single.
"(9) Wife claims one dependency exemption."
On July 3, 2017, Lewis filed a request for order (RFO) seeking to terminate spousal support, or, in the alternative, to reduce spousal support to zero or to otherwise reduce the amount payable to Paula and/or make the amount taxable to Paula and tax-deductible to Lewis. In his documentation, Lewis indicated that he had remarried, and that his income had increased by $407 per month from the time of the stipulated judgment. He further indicated that the taxable portion of his income had increased. Lewis stated in his supporting declaration that "an important reason spousal support should end is that Paula is 71 years of age (and I will join her there on September 9th of this year) and we should be able to live out the rest of our years without any ties between us." Lewis did not mention Family Code section 4322 in his RFO.
Lewis noted that his new wife's monthly income is $5,300.
Paula filed a responsive declaration to Lewis's RFO in September 2017. Paula asked the court to deny Lewis's requests to terminate or modify the stipulated spousal support order. Paula declared that the parties had settled a disagreement over the purpose of the disability insurance policy proceeds by agreeing that Lewis would pay Paula $2,500 per month for five years, until her retirement, and that thereafter, he would pay her $3,000 per month, tax free.
Paula noted that the parties' incomes had not materially changed from the time they entered into the MSA and provided a table showing the parties' assets and sources of income to illustrate her assertion. She further noted that Lewis's contention in his declaration to the effect that the community property had been divided equally between the parties, but that Paula now had approximately $280,000 more in her estate than he had in his estate, failed to take into account the $450,000 in separate property inheritance that Paula had received during the marriage. She asserted that there had been no material change of circumstances with respect to the parties' separate estates. Paula stated that she continued to live "at our marital standard," and that she "rel[ies] on the portion of the UNUM policy that [she] receive[s] from Lewis to maintain that standard." She asserted that the parties had "bargained regarding spousal support and Lewis agreed to share the tax-free disability money with me," and further noted that although the parties were married for almost 36 years, Lewis had been paying the agreed-upon support "for only 10 years."
The court set the matter for a hearing and heard evidence and arguments from the parties and their attorneys on October 11, October 24, and November 29, 2017. The trial court attempted to focus the parties on the issue of a whether there had been a material change in circumstances since the time the parties entered into the MSA. The court repeatedly asked how the parties' circumstances had changed since the time the judgment had been entered and requested argument from the parties "as to what the material change in circumstance is."
During the hearings, the parties discussed the fact that Paula had recently become subject to a required minimum distribution (RMD) of $4,814.83 per year from her retirement accounts.
Toward the end of the hearing, the trial court posed the following question to Lewis's attorney: "So maybe you can explain that a little further as to why didn't they bargain for this and why wasn't all of this already contemplated in the judgment, because I'm trying to figure out, well, what is the material change in circumstance[?]" Lewis's attorney responded that Paula was now retired. When the court pressed the issue, stating, "[T]hat was contemplated in the judgment," Lewis's attorney replied, "But it wasn't contemplated on a date certain." Lewis's attorney then asserted that Paula's estate had grown compared with Lewis's estate, and that a certain percentage rate of return should be imputed to Paula's investments and should be considered to be additional income imputed to her.
Paula filed a "Supplemental Closing Argument" with supporting points and authorities. Lewis also filed a "Supplemental Closing Argument," which included his objections to Paula's "Supplemental Closing Argument."
The trial court issued a "[Proposed] Statement of Decision and Ruling re: Motion for [M]odification of [S]pousal [S]upport" (Proposed Statement of Decision) on January 24, 2018. Pursuant to Paula's earlier request for a statement of decision, the court addressed the two issues that Paula had identified as being contested in this proceeding: (1) the "change of circumstances since the judg[ ]ment was filed March 12, 2008," and (2) the appropriateness of any "[m]odification or termination of spousal support payable to [Paula]." The court found no material change in circumstances that would support the termination or modification of spousal support, and specifically found that "the parties negotiated a specific support amount in their judgment and even contemplated an increase to account for [Paula's] retirement." The court indicated its intention to deny Lewis's request for termination or modification of spousal support.
Paula had also requested attorney fees from Lewis, but the court's proposed Statement of Decision indicated that the court planned to deny Paula's request.
Lewis filed an "Objection to the '[Proposed] Statement of Decision and Ruling re: Motion for Modification of Spousal Support' " (some capitalization omitted). In his objection to the court's proposed decision, Lewis for the first time referenced section 4322 and cited In re Marriage of Terry (2000) 80 Cal.App.4th 921 (Terry). Lewis stated that he believed that the court's "error" in not making a finding under section 4322 was "inadvertent" and noted that the purported error could be "remedied easily by the court." In response, Paula contended that the trial court was not required to make a finding under section 4322 because neither party had identified such a finding as a " 'controverted issue' " to be addressed by the court. Paula also asserted that, absent a finding of a change in circumstances, no finding under section 4322 was required.
We will refer to this document as Lewis's Objection.
On May 31, 2018, the trial court issued its final "Statement of Decision and Ruling re: Motion for [M]odification of [S]pousal [S]upport" (Statement of Decision). In the Statement of Decision, the court specifically addressed the applicability of section 4322, as well as Lewis's contentions regarding the following purported changes of circumstances: the "passage of time and its consequences, the sum of 11 years 7 months since the date of separation[,] which resulted in the Petitioner's retirement, Paula receiving social security, Paula receiving IRA distributions, Lewis receiving social security," as well as "Paula's well managed estate which now totals approximately $1,700,000 compared to Lewis's estate of $1,400,000," and "the relative income of both parties."
The court found that the parties' incomes had not changed significantly between 2008 and 2017. Lewis had a gain in income of $407 per month between 2008 and 2017, while Paula was receiving $318 less per month in 2017 than she did in 2008. The court stated that the changes to the characterization of the parties' various income sources as taxable or nontaxable "makes no appreciable difference" in the court's analysis. The court further found that the assets of the parties had not changed in any meaningful way. Specifically, the court noted that at the time of the stipulated judgment, Paula had approximately $280,000 more than Lewis in separate property, as a result of her inheritance. At the time of Lewis's RFO, Paula and Lewis had each accumulated slightly more than $300,000 in additional assets, and the "difference between Lewis's current assets and Paula's current assets is $280,234."
Although Lewis argued that Paula had taken approximately $3,000 in withdrawals from her Individual Retirement Accounts (IRAs), the trial court found credible Paula's testimony that she did not regularly withdraw this amount, and that neither party had withdrawn from their IRAs on a regular basis. The court therefore determined that additional withdrawals from the IRAs would not be "included in the monthly income of either part[y]." The court did find, however, that because both parties "are now over the age of 70 ½," both parties are subject to RMDs from their retirement accounts. Paula presented evidence that her RMD for the year 2017 was $4,814, while Lewis was not sure what his yearly RMD would be. The court concluded that there was no information available to suggest that there would be a significant difference in the amounts of the parties' RMDs.
The trial court further addressed Lewis's "assert[ion]" that "the most important reason that support should end is that both parties are in their 70s and should live out the rest of their lives without any ties between them and that support has served its purpose of putting supported party in an enviable financial position." On this point, the court noted that the MSA consisted of "53 pages of carefully crafted agreement between the parties" and that the "parties relied on" the judgment that incorporated the MSA, given that they had "negotiated a specific support amount in their judgment with full knowledge of income, expenses and assets of each party." The court found Lewis's contentions regarding the existence of any purported change of circumstances to lack merit.
Finally, the court added a two-page section to its Statement of Decision regarding section 4322 that had not been included in its Proposed Statement of Decision. The trial court noted that section 4322 "did not change or replace the requirement of a significant change in circumstances for modifying spousal support," citing Peterson v. Peterson (1973) 30 Cal.App.3d 477, 482 (Peterson), which involved the predecessor statute to section 4322, Civil Code section 4806. The court proceeded to address Paula's separate estate, noting that in 2008, Paula "had over 1 million dollars in assets and had approximately $280,000 more than Lewis due to a separate property inheritance." The court stated, "Even with this difference that existed at the time of the judgment, the parties not only agreed to a spousal support order for Paula in the amount of $2,500 a month, the parties bargained for an increase in spousal support order to $3,000 a month to address Paula's retirement." In addition, "[t]he current value of their assets reflects that both Lewis and Paula's retirement account[s] grew at an equally steady rate and their relative financial position[s] remain[ ] consistent today as [they were] at the time of the judgment."
The court proceeded to specifically address Lewis's contention, set forth in his Objection to the court's Proposed Statement of Decision, that the "change of circumstance since the 2008 judgment is that Paula is earning a 7% rate of return on her account valued at $1.4 million dollars." As the court noted, Lewis was requesting that the court impute to Paula an additional $8,167 per month in income based on the seven percent return rate, such that the court could find that Paula's estate was sufficient under section 4322, and that spousal support should be terminated. The court rejected Lewis's contention, concluding that there was no "documentation or any reliable testimony" on the issue of what rate of return could actually be attributed to Paula's investments, nor whether such a rate of return would be sufficient to ensure that Paula's estate could provide for her support throughout her lifetime. The court acknowledged that Paula had said that she thought that she had received a seven percent return on her investments, but determined that without any documentary evidence or expert evidence presented on that issue, the court could not find that either party was receiving any particular rate of return, or whether any particular growth attributed to Paula's estate would permit it to grow and "last through her life expectancy." The court noted that "[t]he only information that . . . this court received regarding the amount that each party had in their retirement accounts was what they listed in their pleadings and income and expense declarations," and that "[n]either party presented any documents from any financial institutions pertaining to Lewis or Paula's retirement accounts."
For this reason, the trial court concluded that Lewis, as the moving party, had failed to demonstrate a material change in circumstances, and denied his request to terminate or modify the spousal support order included in the stipulated judgment.
The trial court also denied Paula's request to award her attorney fees under section 271. Neither party has challenged the attorney fees ruling.
III.
DISCUSSION
Lewis contends that Paula has sufficient assets and income of her own to satisfy her reasonable needs, and that the trial court therefore erred, as a matter of law, in refusing to apply section 4322, which requires that where the court makes a finding that "a party has or acquires a separate estate" that is "sufficient for the party's proper support," no spousal support is to be ordered or continued in favor of that party. Paula responds that Lewis failed to establish the existence of a material change in circumstance sufficient to require the termination of the spousal support that Lewis agreed to pay her. A. Relevant legal standards
It is a fundamental rule of appellate review that a judgment is presumed correct and the appealing party must affirmatively show error. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)
A party moving to modify or terminate spousal support has the burden to show a material change in circumstances since the time of the last support order. (In re Marriage of West (2007) 152 Cal.App.4th 240, 246 (West).) " 'A modification of spousal support cannot be granted in the absence of proof of a change in circumstances.' " (In re Marriage of Khera & Sameer (2012) 206 Cal.App.4th 1467, 1484 (Khera & Sameer).) This is true regardless of whether the spousal support amount is established by court order or the parties' agreement. (In re Marriage of Dietz (2009) 176 Cal.App.4th 387, 396 (Dietz) [" 'Modification of spousal support, even if the prior amount is established by agreement, requires a material change of circumstances since the last order.' "].) A change in circumstances "means a reduction or increase in the supporting spouse's ability to pay and/or an increase or decrease in the supported spouse's needs. It includes all factors affecting need and the ability to pay." (West, supra, at p. 246.)
"The trial court has broad discretion in deciding whether to modify a spousal support order based upon changed circumstances." (In re Marriage of Swain (2018) 21 Cal.App.5th 830, 836.) In exercising its discretion, the trial court considers the same criteria set forth in section 4320 as it was obligated to consider in making the initial support order. (In re Marriage of Shaughnessy (2006) 139 Cal.App.4th 1225, 1235.) "These factors include the ability of the supporting party to pay; the needs of each party based on the standard of living established during the marriage; the obligations and assets of each party; and the balance of hardships to each party. [Citation.]" (Terry, supra, 80 Cal.App.4th at p. 928.) A supported spouse's receipt of additional income in the form of retirement benefits may constitute a change in circumstances. (In re Marriage of Shimkus (2016) 244 Cal.App.4th 1262, 1274-1276.)
" '[I]n determining what constitutes a change in circumstances the trial court is bound to give effect to the intent and reasonable expectations of the parties as expressed in the agreement,' and, thus, 'the trial court's discretion to modify the spousal support order is constrained by the terms of the marital settlement agreement.' [Citation.]" (Dietz, supra, 176 Cal.App.4th at p. 398.) B. Analysis
On appeal, Lewis contends that the trial court erred in failing to conclude that Paula's separate estate is sufficient for her proper support under section 4322, which provides that "where . . . a party has or acquires a separate estate, including income from employment, sufficient for the party's proper support, no support shall be ordered or continued against the other party." (§ 4322.) He argues that the trial court erred in considering the parties' relative incomes and estates, and that the court should have simply assessed the sufficiency of Paula's separate estate to meet her needs. Lewis contends that the trial court's analysis regarding "changed circumstances . . . was fatally flawed" because the court looked to a disparity in income between the parties, "rather than the sufficiency of Wife's separate estate as required under Family Code section 4322." (Underscore omitted.) Lewis repeatedly asserts that the first thing the trial court should do when faced with a motion for modification or termination of spousal support is to analyze the supported party's separate property estate to determine whether that separate property estate is sufficient under section 4322.
We disagree with Lewis's contention that the changed circumstances rule does not come into play as an initial matter in a proceeding in which the supporting party requests termination or modification of spousal support, even where that request is made pursuant to section 4322. As the trial court noted, it has long been the law, even under the predecessor statute to section 4322, that in a modification proceeding, the moving party must demonstrate the existence of a material change in circumstances since the time of the last support order before the court may make any adjustment to a final spousal support award. (See Peterson, supra, 30 Cal.App.3d at p. 479 [rejecting argument that 1970 amendment to Civil Code section 4806, which was later moved to section 4322 without substantive change, " 'repeals the change of circumstances rule' " due to its newly express reference to application in modification proceedings].)
In his reply brief, Lewis appears to concede that a change of circumstances must be demonstrated before the court may terminate support, but he contends that, as in Terry, the trial court in this case should have found that Paula's estate has increased sufficiently in value such that, as a matter of law, she has the ability to be "self-supporting" (boldface and capitalization omitted). Terry makes clear that the "acquir[ing of] a separate estate, including income from employment, sufficient for the party's proper support" (§ 4322) can itself constitute a material change in circumstances that could trigger the court's ability to revisit an otherwise permanent spousal support order. However, we see no error with respect to the trial court's resolution of this issue.
First, contrary to Lewis's contention on appeal, it is clear that the trial court did consider whether Paula's separate estate was sufficient for her proper support in the context of determining whether Lewis had met his burden to demonstrate a material change in circumstances. Although Lewis never cited or discussed section 4322 prior to the trial court's issuance of its Proposed Statement of Decision, once Lewis raised it in his objections to the Proposed Statement of Decision, the trial court issued a final Statement of Decision that addresses this statutory provision. In fact, the trial court specifically addressed section 4322 in a section of the order under the heading "Change of Circumstances and Family Code Section 4322." (Boldface and underscore omitted.) This section comprises almost two full pages of text. The trial court noted that the provisions of section 4322 "did not change or replace the requirement of a significant change in circumstances" before a court may modify a permanent spousal support order, and explained that one of the factors in determining whether spousal support should be granted generally is "[t]he obligations and assets, including the separate property, of each party" (see § 4320, subd. (e)). The trial court went on to consider the assets that comprise Paula's separate estate, for purposes of determining whether Paula's separate estate had materially changed over time, such that the estate could now provide her with sufficient income to ensure her " 'proper support.' "
As the trial court found, Lewis failed to demonstrate that there had been any material change in circumstances that the parties had not contemplated at the time they entered into the MSA, between the time the stipulated judgment was entered and the time Lewis filed his RFO. The record amply supports the trial court's determination. Indeed, the evidence presented at the hearings demonstrated that neither party's income had changed in any material way between 2008 and 2017. In fact, Lewis's own figures showed that his income had increased by $407 per month between 2008 and 2017, although some of that income had apparently become taxable. Paula's income and expense declaration demonstrated that in 2017 she was receiving $318 less per month in income than she had been receiving in 2008. Thus, absent Lewis's support payments, Paula's own income continued to be less than the amount set by the stipulated judgement as the amount necessary to meet her "reasonable needs" (see Terry, supra, 80 Cal.App.4th at p. 926). The court further found that the assets of the parties had not changed in any meaningful way—in other words, the court found that neither Lewis's nor Paula's estates had materially changed during the intervening years since the parties had agreed to the amount of spousal support that Lewis would pay Paula. Specifically, the court noted that at the time of Lewis's RFO, Paula and Lewis had each accumulated slightly more than $300,000 in additional assets from what they had at the time of their separation, and that the difference between Paula's estate and Lewis's was just above $280,000, which is essentially the same as the difference in their estates at the time they negotiated the MSA and agreed that Lewis would pay Paula spousal support. Lewis does not contend that the trial court's findings in this regard are unsupported by the evidence.
In 2008, Paula's income and spousal support together provided her with approximately $8,140 per month. Under Terry, this amount represents her "reasonable needs" and constitutes the amount that her separate estate would have to provide in order to ensure her "proper support" for purposes of section 4322. (See Terry, supra, 80 Cal.App.4th at p. 928).
Essentially, the trial court found that Paula's separate estate had not changed in any material way that was not entirely foreseeable at the time the parties entered into the MSA. Lewis has not demonstrated that the trial court's assessment of Paula's financial position was in error. Lewis nevertheless contends that the trial court did not properly weigh and evaluate the evidence before it with respect to the amount of income that should be attributed to Paula as derived from her separate property estate, which has grown slightly in the intervening time, and that this additional income constitutes a sufficient change in circumstances to trigger application of section 4322. He argues, for example, that in addition to the amount that Paula was receiving from her RMD, the court should have attributed to Paula income equal to what she testified might have been a return rate of seven percent on her $1.4 million in retirement, annuities, savings bonds, stocks, and general savings, which, he asserts would provide her with an additional $8,167 per month. However, as Dietz makes clear, the trial court could fairly consider the reasonable expectations of the parties with respect to any anticipated growth in their respective estates at the time they jointly agreed that Lewis would pay spousal support to Paula until she remarried, one of them died, or upon further order of the court, as evidenced in the parties' MSA, to conclude that no material change of circumstances had occurred in this case.
In Dietz, supra, 176 Cal.App.4th at page 399, the appellate court considered whether there had been a material change in circumstance that warranted the trial court's reduction of a previously agreed upon spousal support order. The trial court had found the existence of a material change in the parties' circumstances based on the fact that the supported spouse's "share of the community property interest in the retirement accounts was now accessible to her without penalty and was valued at $500,000" and because she owned securities that had increased in value. (Id. at p. 400.) On review, in considering whether the trial court had correctly determined that the requisite material change in circumstances had in fact occurred, the Dietz court noted that it was required to " 'give effect to' " the parties' " 'intent and reasonable expectations' " at the time they entered into the agreement: " '[A] marital settlement agreement is a contract between the parties. [Citations.] Where the agreement permits modifications, those modifications require a showing of a change in circumstances. [Citations.]' " (Id. at p. 398.) Therefore, when a court's task is to determine whether a change in the parties' circumstances has occurred since the prior support order, " 'the trial court is bound to give effect to the intent and reasonable expectations of the parties as expressed in the agreement,' and, thus, 'the trial court's discretion to modify the spousal support order is constrained by the terms of the marital settlement agreement.' " (Ibid., italics added.)
The Dietz court noted that the parties in that case had expressly considered the potential increase in value of their separate estates over time and had addressed that issue in their marital settlement agreement. On this point, the Dietz court stated:
"The 1999 stipulated judgment reflects Park and Laura's bargained-for exchange through which they agreed how they would divide their assets, including their community property interests in the retirement accounts. The stipulated judgment expressly (italics omitted) acknowledges Park and Laura's expectations that the value of the subject retirement accounts might increase, stating that each party would receive one-half of the community property interest in the retirement accounts, 'including any and all contributions made up to the date of separation (Sept. 25, 1996), and any increase or decrease in value of such assets related to market conditions.' (Italics added.) The 2002 stipulated judgment, which modified portions of the 1999 stipulated judgment, again expressly stated that each party was awarded one-half of the community property interest in the retirement accounts and retained the language, 'including . . . any increase or decrease in value of such assets
related to market conditions.' Necessarily included in this express division of the retirement accounts was the parties' reasonable expectations that they both would reach the age at which they could access such accounts without a penalty." (Dietz, supra, 176 Cal.App.4th at p. 399.)
The Dietz court further considered the "intent" and "reasonable expectations" of the parties that could be derived from another aspect of the parties' MSA:
"The 1999 stipulated judgment also reflects the parties' expectations as to spousal support. They agreed Park would pay Laura $16,500 in monthly spousal support until Park's death, Laura's death, Laura's remarriage, or by further order of the court. . . . The 1999 stipulated judgment did not in any way suggest the parties expected that spousal support, or any modification thereof, would be based on the value of the parties' community property assets divided therein." (Dietz, supra, 176 Cal.App.4th at p. 400.)
After considering the reasonable expectations of the parties as expressed in the terms of their various agreements, the Dietz court turned to "consider[ing] whether a material change of circumstance surfaced to support the reduction of Park's spousal support obligation," and ultimately rejected the trial court's conclusion that a material change of circumstances had occurred because the supported spouse's "share of the community property interest in the retirement accounts was now accessible to her without penalty and was valued at $500,000, and Laura owned securities that had increased in value by $220,000." (Dietz, supra, 176 Cal.App.4th at p. 400.) The court stated, "But as discussed ante, the accessibility and possible increase in value of Laura's share of the retirement accounts were part of the parties' expressed reasonable expectations in entering the 1999 stipulated judgment and cannot constitute a material change of circumstances on these facts." (Ibid., second italics added.)
The Dietz court did, however, remand one issue to the trial court for further consideration. Because the record did not disclose whether the securities that had increased in value by $220,000 had been "awarded . . . through the 1999 stipulated judgment," the court remanded for "the trial court to determine whether the securities were awarded through the 1999 stipulated judgment, and if so, to apply the same standards" that it had just applied to the supported spouse's retirement accounts. (Dietz, supra, 176 Cal.App.4th at pp. 400-401.) --------
Apparently conceding that the holding in Dietz would be relevant to any determination of the applicability of section 4322, Lewis argues only that Dietz does not apply to this case because, he maintains, the underlying facts here are different. Specifically, Lewis asserts that "the specific reason the [Dietz] Court failed to find a change in circumstances is due to the precise language contained in the stipulations that clearly indicated the parties' expectation of accessing retirement accounts without penalty and expressly acknowledges the fact that the value of such accounts may increase over[ ]time." We agree that the Dietz court relied heavily on the parties' intentions and expectations in that case, as expressly addressed by the terms in the MSA. What Lewis fails to acknowledge, however, is that the MSA at issue in this case, like the MSA in Dietz, contemplates a potential increase in the value of the parties' respective assets over time. In other words, the parties here reasonably expected that there might be some growth in their separate estates over time, and nevertheless agreed that Lewis would provide a certain level of support to Paula until she remarried, either of the parties died, or the court made a different order.
In the section of the MSA titled "DIVISION OF COMMUNITY AND CO-OWNED PROPERTY," after listing the various community property assets and their equal division, the MSA states: "The assets and interests, as well as the rents, issues and profits of the assets and interests, and accretions to the assets and interests received by each party pursuant to this division shall, from the effective date of this Agreement, become and remain the recipient's sole and separate property." (Italics added.) Although this language is not identical to the language that the Dietz court found to be significant, the language in Lewis and Paula's MSA nevertheless makes clear that they, like the spouses in Dietz, specifically anticipated a possible increase in value of each of their separate estates. Also, like the MSA in Dietz, the language in the MSA here "reflects the parties' expectations as to spousal support." (Dietz, supra, 176 Cal.App.4th at p. 400.) In fact, Lewis and Paula's MSA essentially mirrors the MSA in Dietz with respect to spousal support, in that it states that Lewis is to pay Paula spousal support until his death, Paula's death, Paula's remarriage, or further order of the court. (See ibid. [the parties agreed "[husband] would pay [wife] $16,500 in monthly spousal support until [husband's] death, [wife's] death, [wife's] remarriage, or by further order of the court"].) And, like the stipulated judgment in Dietz, the stipulated judgment at issue in this case does not "in any way suggest the parties expected that spousal support, or any modification thereof, would be [determined] based on the value of the parties' community property assets divided therein." (Ibid.)
We therefore reject Lewis's contention in his reply briefing that Paula's reliance on Dietz, supra, 176 Cal.App.4th 387 is improper because "the precise and specific language contained in the MSA" in Dietz is "not contained in the MSA in the present case." Dietz is clearly relevant to the determination of this appeal. When the amount and duration of spousal support is established by the parties' agreement, the trial court, " 'by including the stipulation [regarding spousal support] in its own decree, presumes that the parties arrived at a fair support award, after arm's-length negotiations, that took into consideration all of the circumstances as they then existed.' [Citation.]" (Khera & Sameer, supra, 206 Cal.App.4th at p. 1484.) Further, when the parties' agreement includes a provision demonstrating that, at the time they entered into that agreement, they envisioned a reasonable increase in the value of their respective estates based on the property that the parties divided through a bargained-for exchange, "the appreciation of such [assets] would be within the parties' reasonable expectations in entering into the . . . stipulated judgment" and that appreciation would therefore be insufficient to form the basis of a material change in circumstances. (Dietz, supra, at p. 401.) For this reason, we agree with the trial court that Lewis has failed to establish the existence of a material change in circumstances that would justify a reduction in, or termination of, the spousal support ordered as part of the stipulated judgment in this case.
We also reject Lewis's contention that the "MSA is devoid of any language indicating that Paula's retirement was a foregone conclusion bargained for in the parties' MSA," and that therefore, Paula's "retirement alone" could support a finding of a change of circumstances. Contrary to Lewis' suggestion, the MSA expressly states that Paula's retirement was considered and addressed: Lewis was to pay Paula $2,500 per month starting August 1, 2007; the parties further agreed that, in order "[t]o address Wife's retirement" (italics added), Lewis would begin paying Paula $3,000 as of August 1, 2012. Clearly the parties considered, weighed, and bargained for particular terms in their agreement, including the amount of spousal support, in light of Paula's anticipated retirement.
IV.
DISPOSITION
The order of the trial court is affirmed. Paula is entitled to costs on appeal.
AARON, J. WE CONCUR: HUFFMAN, Acting P. J. DATO, J.