Opinion
A146361 A147370
03-06-2017
KAREN BORG, Petitioner and Respondent, v. BRYSON BORG, Respondent and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Solano County Super. Ct. No. FFL115719)
In this consolidated appeal, appellant Bryson Borg appeals from trial court orders in ongoing dissolution proceedings with his former wife, Karen Borg. These orders denied his request to set aside a 2011 marital settlement agreement (MSA), declined to modify spousal support, modified child support, and granted Karen two awards for attorney fees and costs. One award for fees and costs was made under Family Code, section 2030, which allows a trial court to shift the responsibility for paying fees and costs from one party to the other, and the other award was made under section 271, which allows a trial court to impose fees and costs as a sanction.
The Borgs will be "refer[red] to . . . by their first names for purposes of clarity and not out of disrespect." (Rubenstein v. Rubenstein (2000) 8l Cal.App.4th l131, 1136, fn. 1.)
All statutory references are to the Family Code unless otherwise specified.
We largely affirm, except we remand for the recalculation of child support for several distinct periods.
I.
FACTUAL AND PROCEDURAL
BACKGROUND
After having been married for about 13 years, the Borgs separated and initiated marriage dissolution proceedings. A judgment of dissolution incorporating the MSA was entered by the trial court on February 8, 2011. Among other obligations, the MSA required Bryson to pay spousal support and mortgage-and-related expenses for a residence awarded to Karen. The MSA specifically provided that the property division was not subject to modification by any court or by one party without the express written consent of the other party. Bryson did not timely appeal from the judgment, and he does not contend otherwise.
Bryson claims that by February 2012 he discovered he had been fraudulently induced into entering into the MSA. On April 6, 2012, he filed a pleading (which we refer to as the Order to Show Cause, or OSC) in which he requested relief from the February 2011 judgment. Bryson contends that the OSC should be characterized as a motion to set aside the judgment based on fraud under section 2122, which has a one-year statute of limitations. Karen, by contrast, contends that the OSC should be characterized as a motion to modify the MSA based on "mistake, inadvertence, surprise, or excusable neglect" under Code of Civil Procedure section 473, subdivision (b). The characterization of the OSC is central to this appeal. The parties agree that unless the OSC is characterized as a motion to set aside the judgment Bryson missed the deadline to bring such a motion.
The trial on the OSC was delayed in large part because of the parties' extensive litigation on a variety of disputes. In the midst of this litigation, Bryson filed in September 2013 (outside the one-year limitations period for a set-aside motion) a status- conference statement asserting that the OSC was a request to set aside the MSA on the basis of fraud.
During that time, the trial court issued two orders issuing writs of execution to sell Bryson's securities in order to satisfy arrears in both spousal-support and mortgage payments. This court affirmed those orders in a nonpublished opinion. (Borg v. Borg (Jan. 27, 2016, A141607).)
The trial on the OSC finally started in August 2014, two and a half years after the OSC was filed. At the trial, the trial court ruled against Bryson on the characterization of the OSC by finding that it was a motion to modify, not to set aside, the judgment. As a consequence, the court denied Bryson's attempts to introduce evidence on whether he was fraudulently induced into entering the MSA.
The trial court filed a 37-page statement of decision on August 17, 2015. In it, the court explained that the OSC and its supporting declaration set "forth no facts by which any person reading it, even liberally, could construe that it relied upon any part of [Family Code] section 2122, let alone 2122(a)." According to the court, the declaration contained no facts outlining fraud and only contained a "conclusory statement . . . the [MSA] is 'unconscionable' and 'violates public policy and statute.' " The court found that the declaration did not support Bryson's claim to have the MSA set aside because it essentially asserted that the MSA was inequitable, which under section 2123 is not a ground to set aside a judgment. Thus, the court ruled that Bryson had failed to plead or request a set aside under any theory, and it ruled that spousal support was not modifiable.
The trial court then addressed the modification of child support, retroactive to the date of the OSC's filing, and it calculated support for five different periods to reflect times in which Bryson held different jobs and had differing levels of income. The court also ordered Bryson to pay to Karen $100,000 for her attorney fees and costs under section 2030. A judgment adopting the statement of decision was entered on September 4, 2015. Several months later, on December 18, 2015, the court entered a post-judgment order awarding Karen an additional $60,000 for her attorney fees as a sanction under section 271.
Bryson appeals from both the September 4, 2015 judgment and the order of December 18, 2015. The court ordered the appeals consolidated.
II.
DISCUSSION
A. The Trial Court Properly Determined that Bryon's Motion Was a Motion to Modify, Not to Set Aside, the MSA.
Bryson's primary argument on appeal is that the trial court erred by not construing his OSC as a motion to set aside the MSA under section 2122. We are not persuaded.
1. The OSC.
The OSC was submitted on a Judicial Council form, and a box stating "Modification" was checked next to the form's title, "Order to Show Cause." On the form, a party may ask the court to issue various orders by checking various boxes. One such order pertains to "SPOUSAL OR PARTNER SUPPORT," and Bryson checked the box next to it that states, "Modify existing order." The order to be modified is identified as having been filed on "2/8/2011," which ordered Bryson to pay "$2,125.00 plus PITI on [Karen's] residence."
On the form, Bryson asks for "OTHER RELIEF." In typed text on an attachment to the form, Bryson described this other relief as follows:
1. Terminate the order requiring [Bryson] to pay the cost of the mortgage, property taxes, and homeowner's insurance on residence owned by [Karen], as reserved by the court.
2. Require [Karen] to amend her tax returns for tax years 2010 and 2011 to reflect that payments by [Bryson] described in paragraph 1 above constitute spousal support which is taxable to [Karen].
3. Terminate provision continuing spousal support if [Karen] remarries, cohabits, or has earnings or income and impose statutory criteria of Family code Sec. 4320.
4. Reallocate responsibility for insured or uninsured health care expenses of the minor children, as reserved by the court.
The form and attachment contain no statements that the OSC is seeking to set aside the February 2011 judgment that incorporated the MSA.
2. The Trial Court's Ruling.
In its statement of decision, the trial court explained at length the basis of its ruling that the OSC was a motion to modify the MSA under Code of Civil Procedure section 473 and not a motion to set aside the MSA under section 2122. We need not repeat the court's explanation in its entirety. Suffice it to say, the court identified numerous reasons for concluding that the OSC was a motion to modify, including that the OSC was captioned a requested for a "modification," set forth five specific proposed changes to the MSA (some of which were antithetical to a set aside of the MSA), contained no request to change the award of assets under the MSA, did not refer to "set aside" or "fraud," and asserted no facts that described a possible fraud. Based on these reasons, the court found, as we have mentioned, that the OSC set "forth no facts by which an person reading it, even liberally, could construe that it relied upon any part of section 2122 . . . ."
3. The Trial Court Properly Ruled that the OSC Was a Motion to Modify.
In his appellate briefing, Bryson does not directly address the trial court's ruling and analysis. Instead, he simply persists in insisting that the court was required to treat the OSC as a motion to set aside the judgment. He is mistaken.
His first point, correct enough as far as goes, is that the title of the OSC, which indicated that it was seeking a modification, does not necessarily preclude a determination that it was in substance a set-aside motion. But the trial court did not rely solely on the title of OSC in finding that it was a motion to modify. It relied on the substance of the pleading, as the statement of decision makes clear.
Bryson's next points are that the trial court and Karen were somehow responsible for his failure to timely file a motion to set aside the MSA (or move to amend the OSC to include a set-aside request). As to the court, Bryson argues that it was aware on several occasions that he wanted to set aside the MSA. He argues that the court did not " 'consistently disagree[]' " (emphasis omitted) that the OSC was a motion to set aside rather than a motion to modify. But the court was not responsible to litigate Bryson's case for him. Assuming that Bryson wanted to set aside the judgment, it was his—not the court's—responsibility to file the proper motion to pursue his objective. As the trial court noted in its statement of decision, nothing prevented Bryson from filing a motion to set aside the MSA, or to amend the OSC to include a set-aside request, during the period in which he was allowed to do so.
Bryson's reliance on Peck v. Superior Court (1960) 185 Cal.App.2d 573 is entirely misplaced. Bryson points out that in Peck, the Court of Appeal referred to not just the OSC, but also to other parts of the record, in observing that a party who had sought to revisit a judgment on the basis of fraud could have raised the fraud issue before the judgment was entered. (Id. at p. 578, fn. 2.) This observation does nothing to support Bryson's contention here that the trial court was required to deem the OSC a set-aside request simply because Bryson at various times in the proceedings indicated his desire for it to be construed as such. If anything, Peck supports the conclusion that Bryson needed to make, and was responsible for making, a motion to effectuate his objective of having the MSA set aside.
After partially blaming the trial court for his failure to file the proper motion, Bryson next targets Karen and argues that she cannot be allowed to gain from the imprecision of his pleading because she knew that he believed he had been fraudulently induced into agreeing to the MSA. He states "there is no basis. . . to conclude that [Karen] lacked sufficient notice that [Bryson's] Initial Motion sought to set aside the previous judgment and the one-sided Agreement on which it was based." But Karen's understanding of the nature of Bryson's general grievances was irrelevant. Whether Karen knew that Bryson thought he had been defrauded had no bearing whatsoever on whether Bryson was required to adhere to the basic litigation obligation for parties to move for the relief they want.
Bryson next contends that his October 2013 declaration, in which he for the first time asserted specific allegations that he had been fraudulently induced into entering the MSA, cured the one-year time bar on filing a set-aside motion because, according to him, the fraud allegations became subsumed within the April 2012 OSC under the relation-back doctrine. This doctrine allows an amended complaint to be deemed to have been filed as of the date of the original complaint when the amendment "rests on the same general set of facts and refers to the same 'offending instrumentalities,' accident and injuries as the original complaint." (Davaloo v. State Farm Ins. Co. (2005) 135 Cal.App.4th 409, 415.)
We decline to extend the doctrine to the circumstances presented here. To begin with, the doctrine applies to the filing of an amended pleading (such as a complaint), and here no such pleading was ever filed. (See Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1010, fn. 7 ["relation back" issue normally concerns whether an amended pleading "relates back"].) Furthermore, procedural rules provide that pleadings may be amended in two ways. First, a pleading may be amended as a matter of course before an answer is filed. (Code Civ. Proc., § 472.) Second, a pleading may be amended after an answer is filed only with the court's permission. (Code Civ. Proc., § 473, subd. (a)(1).) Since Karen filed her response to the OSC on June 5, 2012, Bryson needed the court's permission to amend his OSC, but he neither sought nor obtained such permission. The relation-back doctrine is unavailing to Bryson.
Finally, because we reject Bryson's arguments that the trial court erred as a matter of law in construing the OSC to be a motion to modify, we need not and do not resolve Bryson's arguments that flow from the premise that the OSC was a properly pled set-aside motion.
These arguments include Bryson's claims that a heightened pleading standard is inapplicable for a motion to set aside based on fraud, that the purported request to set aside the MSA was timely, that Bryson was not required to allege that he was materially disadvantaged to adequately plead a set-aside motion, and that the trial court wrongly excluded evidence pertaining to a set-aside motion.
B. Bryson Fails to Demonstrate that He Was Denied a Fair Trial Because of the Trial Court's Evidentiary Rulings.
Bryson contends that the trial on the OSC was unfair because most of Karen's objections were sustained while most of his objections were overruled. In doing so, he does not challenge any specific ruling, stating instead that he "does not contend that the imbalanced evidentiary rulings are grounds for reversal in and of themselves; on the contrary, they are just a further indication of that [sic] cumulative errors, any one of which standing alone arguably might have been harmless, result[] in [his] being denied a fair trial." We cannot conclude that the trial court's evidentiary rulings were erroneous because Bryson has failed to explain how any specific rulings were wrong.
Furthermore, our review of the record shows that many of Karen's objections were sustained, and many of Bryson's objections were overruled, for good reason. For example, some of Karen's sustained objections related to Bryson's attempts to introduce evidence on the issue that the court had ruled was beyond the scope of the OSC: whether the MSA should be set aside on the basis of fraud. None of these evidentiary rulings was erroneous in light of our affirmance of the trial court's determination that the OSC was a motion to modify the MSA. And many of Bryson's overruled objections related to Bryson's efforts to avoid answering reasonable questions about his assets or earnings.
C. In Several Instances, the Trial Court Incorrectly Calculated Support Obligations.
In his opening brief, Bryson presents a long list of arguments of how, according to him, the trial court abused its discretion in imposing support obligations. We would be perfectly justified in concluding that most of these arguments were forfeited. An appellant has the burden to affirmatively show error by the trial court. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) To satisfy this burden, the appellant must provide the reviewing court with cogent arguments supported by legal analysis and citations to the record. The appellant must do more than merely conclude that the appealed order is erroneous, leaving the reviewing court to figure out why. It is neither the role nor the responsibility of the reviewing court to comb through the record to construct theories or arguments that might call into question the validity of the orders being appealed. (See, e.g., Niko v. Foreman (2006) 144 Cal.App.4th 344, 368.) Rather than scour a record unguided, we may conclude that an appellant has forfeited a claim when it is not supported by accurate citations to the record. (Cal. Rules of Court, rule 8.204(a)(1)(C); City of Lincoln v. Barringer (2002) 102 Cal.App.4th 1211, 1239 & fn. 16.)
All further rule references are to the California Rules of Court.
Bryson's arguments regarding support obligations frequently fail to mention the trial court's actual rulings, to identify the time periods to which a contested support calculation applies, to describe the trial court's calculations, or to explain with any detail what the proper calculations should have been. While we could consider these arguments forfeited, we will in the interest of justice proceed to address them as best we can. In doing so, however, we will decline to consider wholly conclusory arguments or arguments that were raised for the first time in Bryson's reply brief. (See Roos v. Honeywell Internat., Inc. (2015) 241 Cal.App.4th 1472, 1487; Nelson v. Avondale Homeowners Assn. (2009) 172 Cal.App.4th 857, 862; rule 8.204(a)(1)(B).)
1. Spousal support.
Under the MSA, Bryson was required to pay Karen $2,125 per month for spousal support until the occurrence of certain contingencies that are immaterial to this appeal. The trial court rejected Bryson's requests to terminate or modify this obligation.
On appeal, Bryson argues that the court erred because Karen once slapped him after their marriage was dissolved. As described by the trial court, "On October 22, 2013, during a too personal exchange between the parties in a parking lot, [Karen] slapped [Bryson], knocking his glasses off."
Bryson's argument is based on section 4320, subdivision (i), which requires a trial court to consider as a factor, among others, in ordering support "any history of violence against the supporting party by the supported party." In rejecting Bryson's argument that this factor required spousal support to be terminated, the court explained that "[Bryson] suffered a single slap by [Karen] in the course of an emotional conversation between the two of them, that there were no preceding incidents of abuse, . . . and that [Bryson] had no reasonable fear of continuing abuse. Domestic violence is not a basis herein to modify an otherwise non-modifiable order."
While we do not condone even a single slap between former spouses, we cannot conclude that the trial court abused its discretion. Section 4320 requires the listed factors to be considered, but it does not mandate the imposition of a particular result, such as terminating an existing support obligation. Instead, the section allows a trial court to consider the factors in the context of the circumstances, exactly as the trial court did here. Our conclusion that the trial court did not abuse its discretion in declining to terminate spousal support on the basis of this factor also finds support in the trial court's later finding, made in the context of its post-judgment consideration of whether Bryson should be ordered to pay Karen attorney fees and costs as a sanction, that Bryson's claim of being a victim of domestic violence was made "for tactical reasons and not because he held a sincere believe that [Karen] posed a risk to his safety."
2. Child support.
Under the MSA, Bryson was required to pay Karen $4,125 per month for support of their three children. This amount was below the amount that would have been imposed, absent the parties' agreement, under the uniform child support guideline. Under the uniform guideline, courts calculate child support by applying a mathematical formula contained in section 4055. (In re Marriage of Bodo (2011) 198 Cal.App.4th 373, 385-386; see §§ 4050-4076.) The guideline expresses California's strong public policy in favor of adequate child support. (Bodo, at pp. 385-386.)
In response to the OSC, the trial court modified and set child support under the uniform guideline by using a computer program called DissoMaster. "DissoMaster is one of two privately developed computer programs used to calculate guideline child support as required by section 4055, which involves, literally, an algebraic formula." (In re Marriage of Schulze (1997) 60 Cal.App.4th 519, 523-524, fn. 2.)
The trial court calculated child support for five separate time periods: 2012, 2013, January through September 2014, October 2014 through December 2014; and 2015. This was because between the filing of the April 2012 OSC and the entry of the judgment in September 2015, Bryson had different jobs and differing levels of income. For each of these five periods, the trial court attached to the judgment as exhibits A through E printouts from DissoMaster identifying the numerical expression of the court's rulings.
a. The Trial Court's Treatment of Bryson's State Tax Payments for the Periods Between 2012 and 2014.
Bryson contends that the trial court wrongly excluded his state-tax payments from support calculations for the 2012-2014 period on the ground that he failed to present sufficient evidence of the amount of state taxes he paid. Including these payments would have benefitted Bryson because they would have reduced the amount of income that was attributable to him in calculating child support. Bryson argues that the court "completely overlooked unrefuted evidence in the record (Leave and Earning Statements for each year between 2012 and 2014) showing payment of [Bryson's] state taxes."
The argument is untethered to the trial court's actual ruling. The court acknowledged that "[Bryson] was subject to Mississippi state taxes, and W-2 forms do reflect Mississippi state withholdings." But it found that, since Bryson "received sizeable state tax refunds and amounts withheld are not necessarily representative of amounts actually paid . . . . for tax years 2012-2014, [it] could not enter tax figures into the [D]isso[M]aster program, and thus could not give [Bryson] a deduction for taxes actually paid, if any."
For example, Bryson apparently received a tax refund of $7,968 from Mississippi in September 2013.
On appeal, Bryson directs us only to the parts of the record demonstrating what the trial court had readily accepted: that Mississippi state income taxes had been withheld. But he cites nothing in the record that would reveal what his actual Mississippi state tax liability was in light of his refunds. Accordingly, we cannot conclude on this record that the trial court abused its discretion.
b. The Trial Court's Treatment of Bryson's Income for 2012.
Bryson makes two arguments specific to the trial court's calculation of child support for 2012. First, he contends that the court failed to properly account for his obligation under the MSA to pay mortgage, homeowners insurance, and tax payments on a residence awarded to Karen. Second, he contends that the court improperly attributed to him income he earned before the OSC was filed. We reject the first argument but accept the second.
Bryson also contends that the trial court erred by excluding $7,469 in monthly vehicle payments he paid to Karen in 2012.
Under the MSA, Bryson agreed to make mortgage and related payments on the residence "until such time as the loan obligation has been satisfied in full." As we noted above, although Bryson did not appeal from the MSA, he did ask in the OSC for this provision to be terminated. As part of order rejecting Bryson's request, the trial court found that the residence "is encumbered in an amount unknown to this court, and [Bryson] received [under the MSA] liquid investment accounts, also in an amount unknown by the court but certainly exceeding $400,000 in value." The court proceeded to explain, in remarks that Bryson ignores in his appellate briefing, that for all it knew, "the division of the estate was substantially equal, as for instance if the value of the investment accounts and other assets awarded to [Bryson] equaled the value of the house after the mortgage was paid off and other assets awarded to [Karen]." The court then rejected Bryson's request to terminate the provision, and Bryson does not argue in this appeal that the court erred in doing so.
Instead, Bryson argues that the trial court abused its discretion by not including these payments as income to Karen in 2012. But on this point, the court explained, in more remarks that Bryson ignores in his appellate briefing, that it "considered whether to use the house related payments [Bryson] paid in 2012 as additional non-taxable income to [Karen], and exercised its discretion under these facts not to do so. The house related payments are property payments, akin to an equalizing payment. With each mortgage payment, [Karen's] equity in the residence increases. Viewed in that light, these payments simply represent an asset, [Karen's] equity in her residence, just in a different form." The court concluded that "[Karen] is not wealthy. . . . While imputing income to residential equity can in certain circumstances be appropriate, the court finds it would not be appropriate or in the children's best interests to do so in this case." Thus, the court held that "the property payments [Bryson] made under the property provisions of the parties' [MSA] are not appropriately considered income to [Karen], and [it] exercise[d] its discretion to exclude such payment in its calculation of guideline support, finding that use of such funds would not be in the best interests of the children."
We can find no abuse of discretion, and Bryson has failed to point to anything in the record to demonstrate that the trial court's treatment of these payments as being required under the MSA to equalize the distribution of marital assets lacked substantial evidence or was otherwise unsupported.
The second argument Bryson makes specific to the trial court's calculation of child support for 2012 is that "[f]ollowing his deployment to Afghanistan in April 2012, [he] never resumed" the heavy workload he had previously carried. He contends that the court abused its discretion in considering income earned before the deployment because it was not "a reasonable predictor of what the parent will earn in the immediate future."
Although the argument is imprecise, we think Bryson has a point in challenging the attribution of income to him that he earned before he filed the OSC in April 2012. At the end of March, Bryson quit his high-paying private job and was deployed to Afghanistan with the Air Force, where he earned less. The judgment expressly stated that child support was being modified "effective April 6, 2012." Yet, the DissoMaster printout attached to the judgment as Exhibit A appears to indicate that child support was modified for all of 2012 and that Bryson's monthly income was averaged by using both pre- and post-April income.
Bryson earned $171,895 in self-employment income "in the first three months of the year." The trial court "averaged over 12 months" this amount, and the average—$14,325—was included on the DissoMaster as monthly "[s]elf-employment income" for each month in 2012. But nothing should have been attributed to Bryson for this self-employment income because it was earned before the effective date of the modification order.
The trial court also attributed $12,075 as monthly wages and salary. This number was calculated by combining a twelve-month average of military wages with a twelve-month average of military bonuses. Bryson earned a total of $93,904 in military wages and a total of $51,000 in military bonuses (one bonus for $15,000 and one for $36,000). The trial court added these sources of income together, and divided the sum by twelve to come up with a monthly average $12,075 for "[w]ages + salary" on the DissoMaster printout ($93,904 + $15,000 + $36,000 = $144,904 - 12 = $12,075). But because Bryson earned all of this military income after April, the sum should have been divided by nine to reflect the number of months in the applicable period. Thus, the amount that should have been attributed as Bryson's monthly wages and salary was $16,100 ($93,904 + $15,000 + $36,000 = $144,904 - 9 = $16,100).
The trial court also attributed $7,147 as monthly "[o]ther nontaxable income." This amount was calculated by combining the amount of combat pay and other military benefits Bryson received in 2012 and dividing the sum it by twelve ($54,732 + $31,032 = $85,764 - 12 = $7,147). But, again, because Bryson earned all of this income after April, the sum should have been divided by nine. Thus, the amount that should have been attributed as monthly average nontaxable income was $9,529 ($54,732 + $31,032 = $85,764 - 9 = $9,529).
Child support obligations for the first three months of 2012 should not have been modified from what was required under the MSA. We remand for the trial court to recalculate child support for the remaining nine months of 2012 based on the corrected calculations.
In light of this remand for a new calculation of 2012 child support, we decline to consider Bryson's alternative argument that the trial court failed to consider the effect of his heavy financial obligations on the children in light of his shared custody of them. Still, we point out that Bryson conceded that he had no physical custody of the children while deployed in Afghanistan in 2012.
c. The Trial Court's Treatment of Bryson's 2013 Capital Gains.
Bryson contends that the trial court improperly included as part of his 2013 income capital gains he received from the sale of an investment account he had held with Charles Schwab. According to Bryson, any capital gains realized from this sale should not have been included as income because it was a "one-time cash-out of a pre-existing asset, not a recurring benefit, which may have produced a capital loss and not a gain." The argument is not persuasive.
Under the uniform guideline, income is "broadly defined" for the purpose of calculating child support. (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 285; § 4058.) But while broad, it is not limitless. (In re Marriage of Pearlstein (2006) 137 Cal.App.4th 1361, 1372.) Section 4058 does not expressly include capital gains within its definition of income, and no published California decision has definitively explained how capital gains should be treated in the calculation of child support.
A party is not normally required to sell a capital asset to pay support payments. " '[S]upport payments usually are paid from present earnings, not liquidation of preexisting assets.' " (In re Marriage of Pearlstein, supra, 137 Cal.App.4th at p. 1372.) But while gains in the value of unsold capital assets generally do not result in such an attribution of income, capital assets can "result in the attribution of income to [a] party for child support purposes to the extent that the party actually realizes income stemming from those assets . . . ." (Id. at p. 1373, fn. 10.)
In his appellate briefing, Bryson does not explain how the trial court calculated his capital gains. The DissoMaster printout attached as Exhibit B to the judgment, however, reveals that the court attributed to Bryson $2,414 in monthly "[o]ther taxable income." This amount appears to have been arrived at by adding $18,535—an amount Bryson himself reported as capital gains on his 2013 federal tax return—with other interest, royalties, and dividends he reported that year, and then dividing the sum by 12.
In California, "[i]ncome tax returns are presumptively correct as to a parent's income in a child support proceeding." (In re Marriage of Loh (2001) 93 Cal.App.4th 325, 332, capitalization omitted.) Thus, the question here is whether Bryson effectively rebutted this presumption, and we conclude he did not. True enough, it appears to be an open question in California whether, and to what extent, capital gains realized from the sale of an asset that funded a marital property division can be attributed to a party for the purpose of calculating child support. (See Taylor v. Taylor (Tenn.App., Sept. 7, 2000, No. M1999-02398-COA-R3-CV) 2003 WL 21302988, 9 [although Tennessee generally includes capital gains as income available for child support, such gains are excluded when generated from an asset that funded the marital property distribution].)
We need not resolve the question here, however, because Bryson cites nothing in the record to explain where the $18,535 he reported as capital gains on his tax return came from. The trial court ruled that it had "receiv[ed] no evidence establishing the actual amount distributed" and was therefore "unable to impute a reasonable rate of return to that distribution." In his appellate briefing, Bryson not only fails to provide any citation to the record where any such evidence might be found, but he also further confuses our understanding of the source of the capital gains by remarking that the sale of the Schwab account "may have produced a capital loss and not a gain." If the sale produced a loss (or if it produced less than the full amount of the $18,535 of capital gains reported on his federal tax return), where did the amount reported on the federal tax return come from? Bryson cites nothing in the record that tells us. Accordingly, we cannot conclude that he rebutted the presumption that his reported capital gains were income available for child support, and we therefore have no basis to conclude that the trial court abused its discretion in including these gains in calculating support.
d. The Trial Court's Imputation of 2014 Earnings to Bryson.
Bryson next contends that the trial court erred in imputing $27,680 of income to him in 2014 from part-time earnings. He argues that "[r]equiring [him] to work full-time as a neuro-radiologist plus work a part-time second tele-radiology job is inconsistent with the needs of the children and the parties' 50-50 physical custody timeshare." According to him, the trial court ordered him to engage in an unreasonable work regime. Although Bryson's argument inaccurately summarizes the trial court's ruling and is again imprecise, our review of the record reveals that the 2014 earnings attributed to Bryson did not conform to the court's rulings and contained certain computational errors.
To begin with, the trial court did not order Bryson to work an unreasonable amount. In fact, what the trial court said is that it "agrees with [Bryson] that he should not be forced to work two fulltime jobs and that doing so would not be in the best interests of the children if it means he cannot enjoy a quality relationship with them." As we shall explain, however, the amounts reflected on the DissoMaster printouts attached as Exhibits C and D to the judgment fail to faithfully apply this ruling.
From January through September Byson enjoyed "lucrative employment" while employed with the Air Force. At the end of September, he voluntarily separated from active duty, and for the next three months he earned income as an independent contractor. Because of this change in employment, the trial court used two periods to calculate 2014 child support, and the court's rulings for each of these periods were entered onto a separate DissoMaster printout for each period.
Both periods contain discrepancies, and we begin by discussing those in the January-through-September period. After agreeing with Bryson that it was not in the children's best interests to require Bryson to work two fulltime jobs, the trial court ruled that it would "exercise discretion to impute the income of only one fulltime job to [Bryson] for this period of time. That income will be [Bryson's] salary as it stood in September 2014." This salary was $8,666 in monthly taxable wages. The court also ruled that it would impute to Bryson for all of 2014 monthly income to account for a $15,000 bonus that Bryson forfeited by not staying employed with the Air Force for one additional month. Bryson does not appeal from the imputation of the forfeited-bonus income to him, which on a monthly basis amounted to $1,250 ($15,000 + 12 = $1,250). Thus, the amount of wages and salary that should have been attributed to Bryson for January through September was $9,916 ($8,666 + $1,250 = $9,916). The trial court, however, incorrectly totaled the amount to be "$9,710", which is also the amount reflected on the DissoMaster printout attached as Exhibit C to the judgment. We remand for the trial court to recalculate child support for January through September 2014 based on the corrected amount.
Turning to the October-through-December period, the trial court found that Bryson had earned a total of $27,680 as an independent contractor and that the monthly average for the three-month period was $9,227. This amount was correctly reflected on the DissoMaster printout attached as Exhibit D to the judgment as "[s]elf-employment income."
But the DissoMaster printout for this three-month period also included $9,916 as "[w]ages + salary," even though the trial court had indicated that only one full-time salary would be imputed to Bryson. The $9,916 figure was apparently arrived at by imputing $8,666—the amount of average monthly wages Bryson was earning while with the Air Force—and adding it to $1,250—the amount of the monthly attribution for the annual bonus Bryson had forfeited.
We agree with Bryson that the court erred in attributing both the self-employment income he actually earned and the $8,666 that was imputed to him. "When the income of a parent does not adequately reflect that parent's earning capacity and station in life, a trial court has at least two possible avenues for addressing this income-related 'special circumstance.' Under one scenario, the court may determine that parent's actual income, derived pursuant to section 4058, subdivision (a), which it would then use to calculate the guideline support amount. If the result of this calculation does not accurately reflect that parent's financial circumstances (and the resulting guideline support amount would therefore be unjust or inappropriate given that parent's actual wealth), the court may deviate from the guideline support amount pursuant to section 4057, which permits a court to deviate from the guideline support amount if the court determines that the formula would be unjust or inappropriate in the particular case. Alternatively, the court could exercise its discretion under subdivision (b) of section 4058 to use a different income amount, based on imputed income that is consistent with that parent's earning ability." (In re Marriage of Sorge (2012) 202 Cal.App.4th 626, 643, fn. 6.) These alternative approaches are either/or; they are not cumulative. Since Bryson's actual income during those three months was higher than his imputed income, the $8,666 portion of the $9,916 attributed for monthly wages and salary should not have been included as income during this three-month period. Thus, the amount of wages and salary that should have been attributed to Bryson for October through December was $1,250—the amount of the monthly attribution for the annual bonus Bryson had forfeited. ($9,916 - $8,666 = $1,250).
Thus, the amount of monthly income attributed to Bryson for October through December for wages and self-employment was $19,143 ($9,227 + $9,916) when it should have been $10,477 ($9,227 + $1,250).
We remand for the trial court to recalculate child support for October through December 2014 based on the corrected amounts.
e. The Trial Court's Imputation of "2015" Interest Income.
Bryson next contends that the trial court abused its discretion in imputing to him "$665 per month in interest (calculated at three percent per annum on $266,187 of [Bryson's] alleged assets)." According to Bryson, this constituted an abuse of discretion because imputing this amount "in 2105 contradicts the [trial court's] observation that [Bryson] liquidated his [IRA] in order to pay [Karen's] attorney fees," and "there is no evidence that [Bryson] had any investment accounts at the time of trial in excess of the $125,000 [IRA] from which a rate of return could be imputed."
The argument is unconnected to the record and is confusing. To begin with, the court imputed $665 per month in interest to Bryson's income in 2014, not 2015. While we could overlook Bryson's reference to 2015 in his appellate briefing as a simple mistake, we are not entirely confident in doing so because he made the same argument, with the same reference to 2015, below.
Even if the argument is meant to pertain to 2014, it is not persuasive because Bryson has wholly failed to cite anything in the record to show that the trial court's findings regarding 2014 asset distributions were inaccurate. The trial court found that "[t]he $665 per month 'other taxable' income represents imputed interest, calculated at 3% per annum on $266,187. Between July 14, 2014[,] and September 2014[, Bryson] took distributions from his investment accounts totaling $386,887, which he deposited with his attorney. He later reinvested $120,700. The distribution of investment funds not reinvested totaled $266,187. Risk-free government bonds currently yield approximately 3%. Applying this very conservative rate of return to the funds not reinvested yields $665 per month."
Bryson's only direct argument is to say that, by the time of the trial, he had no assets from which income could be imputed other than a $125,000 IRA. But Bryson provides no citations to the record that would help us to understand the amount, nature, and timing of the distributions he received, much less how and when the distributions were spent. We simply cannot conclude on this record that the trial court abused its discretion in imputing to Bryson interest income on these assets.
f. The Trial Court's Imputation of 2015 Income Based on Bryson's Earning Capacity and Actual Earnings.
As it had for the last three months of 2014, the trial court imputed to Bryson $8,666 as monthly income for 2015 based on his attributed earning capacity. Bryson contends that this imputation of income was an abuse of discretion. Although we disagree, we conclude that the court improperly attributed to Bryson an additional $2,603 in average actual monthly income, over and above the imputed earnings, for actual wages he received.
We begin by accepting the trial court's imputation of monthly income to Bryson based on his earning capacity. Generally, with respect to an initial support order, the party seeking imputation must show the availability of jobs consistent with a party's skills and qualifications. (See In re Marriage of Wittgrove (2004) 120 Cal.App.4th 1317, 1329.) However, the rule is different when the payor spouse, such as Bryson, seeks to modify an existing order based on changed circumstances. Such a spouse who seeks a downward adjustment after a life change, such as a job loss, generally has the burden to show he or she did not have the opportunity or ability to earn an equivalent income in a different job. (See In re Marriage of Bardzik (2008) 165 Cal.App.4th 1291, 1308.)
The trial court did not abuse its discretion in finding that Bryson failed to satisfy this burden. Bryson argues that he was required to leave the Air Force so that he could stay in California and be near the children, and he claims that there were no available job opportunities in California that were consistent with his marketable skills. He lists a litany of considerations that he maintains the trial court failed to "weigh or consider." But our review of the trial court's decision does not ask whether any evidence was presented that might have supported a decision not to impute income. Rather, it asks whether there was "substantial evidence of a reasonable 'likelihood that [the payor spouse] could, with reasonable effort, apply his or her education, skills and training to produce [the imputed] income.' " (In re Marriage of Smith (2001) 90 Cal.App.4th 74, 82.)
The trial court's imputation of income to Bryson was supported by extensive, and certainly substantial, evidence. Among the court's findings, ignored by Bryson in his appellate briefing, included that "[Bryson] quit his employment with the [Air Force] not only without having secured replacement employment, but also knowing that he could, in fact, remain in the Air Force without any reduction in salary;" that "[Bryson] had both the ability and the opportunity to continue his work in the [Air Force]"; that Bryson did not conduct his job search with "reasonable diligence", and that Bryson rejected reasonable alternative job offers.
After making these findings, the trial court imputed monthly "[w]ages + salary" for 2015 in the amount of $8,666, the amount of average monthly wages Bryson had been earning while employed with the Air Force. It did not impute any income for lost bonuses, as it had in 2014. The correct amount of these imputed wages, $8,666, appears on the DissoMaster printout attached as Exhibit E to the judgment.
But while the trial court properly imputed monthly income to Bryson based on his earning capacity, it improperly added Bryson's actual monthly earnings to his income. These actual earnings reflected the amount Bryson was "receiving [from] some modest work under his contract with ICACTYL," and the trial court adopted Bryson's "figure of $2,603 per month" for them. On the DissoMaster printout, however, two of the numerals were apparently transposed and the amount entered as monthly "[s]elf-employment income" was "2306."
Regardless whether the correct number was $2,603 or $2,306, it should not have been included as income for the calculation of child support. As we explained above, a spouse's income for child support purposes can be calculated based on actual income (§ 4058, subd. (a)) or imputed income (§ 4058, subd. (b)), but these methods are alternative, not cumulative. (In re Marriage of Sorge, supra, 202 Cal.App.4th at p. 643, fn. 6.) Thus, the $2,603 or $2,306 that was attributed to Bryson as monthly self-employment income in 2015 should not have been added in the calculation.
We remand for the trial court to recalculate child support for 2015 based on the corrected amounts.
D. The Award of Attorney Fees.
Bryson lastly contends that the trial court erred in granting Karen two awards of attorney fees. The first awarded Karen $100,000 under sections 2030 and 2032, and it was issued as part of the September 2015 judgment. The second awarded Karen $60,000 as a sanction under section 271, and it was issued under a subsequent order entered on December 18, 2015. We affirm both orders.
1. The Trial Court Did Not Abuse Its Discretion in Awarding on Its Own Initiative $100,000 in Attorney Fees to Karen Under Sections 2030 and 2032.
Under Family Code sections 2030 and 2032, a trial court may "award fees and costs between the parties [in a dissolution action] based on their relative circumstances in order to ensure parity of legal representation in the action." (In re Marriage of Falcone & Fyke (2012) 203 Cal.App.4th 964, 974.) In reviewing an award under section 2030, our standard of review is well settled. " 'A motion for attorney fees and costs in a dissolution action is addressed to the sound discretion of the trial court, and in the absence of a clear showing of abuse, its determination will not be disturbed on appeal. [Citations.]" (In re Marriage of Keech (1999) 75 Cal.App.4th 860, 866 (Keech).)
We cannot conclude that there was a clear shoeing of abuse here. We begin by rejecting Bryson's first argument that the award was improper on the ground that the trial court wrongly construed the OSC not to be a set aside motion. As we have already discussed in detail, the court's ruling on this issue was entirely proper, and we affirm it.
Bryson next argues that "[Karen] did not appropriately plead a request for such fees . . . ." But the parties extensively briefed Karen's entitlement to fees under section 2030 below. Bryson cites to nothing in the record establishing that he objected to Karen's alleged failure to "appropriately plead" her request for a section 2030 award. By failing to making such an objection below, Bryson deprived Karen of the opportunity to respond to it by correcting any alleged procedural infirmities. Accordingly, we conclude that Bryson has forfeited the argument.
Bryson also argues that the award was improper because Karen failed to file an income-and-expense declaration in support of her request for the fees award. But as the trial court noted, any such failure was insignificant because the trial court found that "[Karen's] financial facts had not changed in any material way" since the filing of her declaration in August 2014.
Finally, Bryson argues that the trial court erred by overlooking "salient factors and evidence" and that "the balancing of equities suggests that [Karen] has a greater ability than [Bryson] to pay attorney fees." In making this argument, Bryson misunderstands our standard of review, which, again, requires us to view the evidence in the light most favorable to the court's determination. (Keech, supra, 75 Cal.App.4th at p. 866.) That favorable evidence includes evidence showing that during the course of the litigation, Bryson had a much higher income than Karen's: he had taxable and non-taxable income of $370,542 in 2012, $195,640 in 2013, and $365,000 in 2014. In contrast, Karen had taxable and non-taxable income of $38,172 in 2012, $56,348 in 2013, and $66,435 in 2014.
Evidence also was presented that during the course of the litigation, Bryson had assets that he sold, such as a Corvette for $50,000; and he placed more than $40,000 in a trust account for the payment of appellate expenses. He testified that he had $125,000 in an IRA account and $20,000 in cash. In a declaration Karen filed on April 10, 2015, she stated she owed over $124,000 in fees and costs and expected to owe $20,000 more to file closing trial briefs. All of this evidence supported the court's finding that Karen had less income than Bryson throughout the relevant periods and had far higher unpaid attorney fees at the conclusion of the trial. In the words of the trial court, the evidence established that "[Bryson] emerged from the dissolution proceedings with far more liquidity than did [Karen], as well as far more earning power."
We lastly note that the trial court's section 2030 award was further supported because of Bryson's obstreperous conduct, which we describe in more detail below. Section 2030 expressly allows a court to order one party to pay to the other party "whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding." (§ 2030, subd. (a)(1).) The amount reasonably necessary for Karen to have defended herself in the proceedings have been inextricably tied to Bryson's efforts to make it as difficult on her as possible and to run up her bill. (See In re Marriage of Dick (1993) 15 Cal.App.4th 144, 167-168 [interpreting § 2030's predecessor, former Civ. Code, § 4370.5]; In re Marriage of Kozen (1986) 185 Cal.App.3d 1258, 1264 [need-based award of more than $100,000 justified because husband did not cooperate, misrepresented assets, withdrew from settlement, and was uncooperative during discovery].)
In short, we affirm the section 2030 award against Bryson because we cannot conclude that the trial court abused its discretion in granting it.
2. The Trial Court Did Not Abuse Its Discretion in Awarding $60,000 in Attorney Fees Under Section 271.
Section 271 authorizes a trial court to award attorney fees and costs based "on the extent to which the conduct of each party or attorney furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys. An award of attorney[] fees and costs pursuant to this section is in the nature of a sanction." (§ 271, subd. (a).) The policy behind this statute is " ' "to promote settlement and to encourage cooperation" ' " so as to " ' "reduce the cost of litigation." ' " (Parker v. Harbert (2012) 212 Cal.App.4th 1172, 1176.)
" ' "Litigants who flout that policy by engaging in conduct that increases litigation costs are subject to imposition of attorney fees and costs as a section 271 sanction." [Citations.]' 'The imposition of sanctions under section 271 is committed to the sound discretion of the trial court. The trial court's order will be upheld on appeal unless the reviewing court, "considering all of the evidence viewed most favorably in its support and indulging all reasonable inferences in its favor, no judge could reasonably make the order." ' " (Sagonowsky v. Kekoa (2016) 6 Cal.App.5th 1142, 1152.)
We have no trouble concluding that a trial judge could reasonably have imposed the section 271 award against Bryson under the circumstances presented here. Extensive evidence supports the trial court's finding that he flouted the policy of section 271 by engaging in conduct that needlessly increased litigation costs.
At the outset, we reject Bryson's argument that the award was improper on the ground that the trial court wrongly construed the OSC not to be a set aside motion. As we have repeatedly discussed, the court's ruling on this issue was entirely correct.
Bryson next argues that the award was improper because the trial court "clearly erred in surmising that [his] efforts to challenge the undeniably one-sided [MSA] were in bad faith." But regardless whether it surmised that Bryson's efforts to terminate the MSA were in bad faith, the trial court found plenty of reasons, which are mostly ignored by Bryson in his appellate briefing, for imposing the section 271 award.
The trial court found that Bryson's efforts to terminate the MSA were ill-conceived and excessive and were the main reason Bryson incurred more than $197,000, and Karen incurred more than $183,000, in attorney fees to litigate an issue that, according to the court, neither party should have incurred more than $30,000. The court found that the fees expended "are fairly characterized as unconscionable. On [Bryson's] part, they have decimated his approximately half-million dollar nest egg, received in settlement of the parties' divorce. On [Karen's] part, they have made her penurious, and have placed her very ability to maintain the home she received in settlement of the parties' divorce tenuous. Money that could have been used to fund retirement has been squandered. Money that could have financed college education[] is now lost. Money that could have been used to satisfy the terms of the [MSA] has instead gone to attorney coffers." The court expressly found that Bryson, not Karen, was to blame.
Even if we were to conclude, which we do not, that Bryson's wrong-headed strategy to try and terminate the MSA through the OSC was an insufficient ground upon which to base the section 271 award, it was only one of many reasons given by the trial court to justify the sanction. The court also found that the award was appropriate because Bryson increased litigation costs by failing to disclose all of this assets and expenditures of fees; leaving the Air Force without securing new employment; fighting the payment of what he owed under the MSA by challenging "legitimate writs," shielding assets in his attorney's trust account, "filing a knowingly false notice of stay upon payment of bond," and "discontinuing the use of bank accounts and instead keeping large sums of cash at his residence"; noticing an eventually quashed deposition of Karen's attorney; deposing Karen by asking "stunningly irrelevant questions"; filing a "frivolous" motion for a discovery referee in an effort to force Karen to answer the irrelevant questions; claiming to be a victim of domestic violence "for tactical reasons and not because he held a sincere belief that [Karen] posed a risk to his safety"; failing to follow local rules in approving as to form orders after hearing; failing to meet and confer; insisting on having his own court reporter at hearings; and submitting "consistently inaccurate income declarations," all of which "only further added to the cost of these proceedings." Finally, the court found that Karen had been reasonable in settlement negotiations and Bryson had not. We wholeheartedly agree with the trial court that "[f]inding sanctionable conduct in this matter is not difficult."
The trial court found that "in light of all the circumstances . . . a sanction in the sum of $60,000 . . . would be appropriate." As Bryson only contests the imposition of the sanction, we need not review the factors considered by the court in calculating its amount. We therefore affirm the section 271 award because we cannot conclude that no judge could reasonably have issued it.
E. The Senselessness of This Litigation.
We do not know whether this litigation was driven by the parties, their lawyers, or a combination of both. But damage has been done, and there is plenty of blame to go around. To begin with, the stage was set for much of the litigation by Karen and her attorney presenting to Bryson, and letting him accept without representation, terms in the MSA that the trial court has described as "extremely one sided" and "draconian." The validity of these terms are not before us, but neither Karen nor her attorneys should have been surprised when Bryson eventually lashed out to protest these terms. More moderation and reasonableness on their part at the outset might have helped to mitigate the excessiveness of the ensuing litigation.
Bryson, however, quickly ceded whatever moral high ground he may have once had. He neither appealed from the MSA nor sought to timely challenge it. Instead, armed with attorneys, he embarked on a scorched-earth litigation campaign that was marked mostly by his being obstreperous and taking ill-conceived and self-defeating positions. Among many unfortunate choices was his unreasonableness in responding to an offer in November 2013 to settle the matter on terms that would have given him substantial relief from the MSA and would have ended the hemorrhaging of litigation costs.
In this appeal, Bryson filed a 72-page opening brief attacking almost every aspect of the orders appealed from, and doing so by offering unfocused arguments, failing to properly cite to the record, not explaining his challenges in light of the trial court's actual rulings, over arguing weak points, and under arguing points that potentially had merit. We have been left to search through the record, often unguided, to understand the arguments and to discern their validity. Many of the arguments seem to be oblivious of the applicable standards of review, which require us to presume the correctness of the trial court's orders and to indulge all intendments and presumptions to support them on matters as to which the record is silent. (Denham v. Superior Court, supra, 2 Cal.3d at p. 564.)
The end result of all this litigation is that the parties are poorer, the attorneys are richer, and the children, the most blameless of all, are harmed.
III.
DISPOSITION
Child support obligations are remanded to be recalculated as follows:
For 2012, no modification of support shall be imposed for January through March. For the nine-month period of April through December, support shall be recalculated with the same entries on the DissoMaster printout attached as Exhibit A to the trial court's September 4, 2015 judgment, except that Bryson should be attributed nothing for self-employment income, $16,100 for wages and salary, and $9,529 for nontaxable income.
For the nine-month period of January through September 2014, support shall be recalculated with the same entries on the DissoMaster printout attached as Exhibit C to the trial court's September 4, 2015 judgment, except that Bryson should be attributed $9,916 for wages and salary.
For the three-month period of October through December 2014, support shall be recalculated with the same entries on the DissoMaster printout attached as Exhibit D to the trial court's September 4, 2015 judgment, except that Bryson should be attributed $1,250 for monthly wages and salary.
For 2015, support shall be recalculated with the same entries on the DissoMaster printout attached as Exhibit E to the trial court's September 4, 2015 judgment, except that Bryson should be attributed nothing for self-employment income.
In all other respects, the judgment of September 4, 2015, and the order of December 18, 2015, are affirmed.
/s/_________
Humes, P.J. We concur: /s/_________
Margulies, J. /s/_________
Banke, J.