Opinion
NOT TO BE PUBLISHED
APPEAL from an order modifying spousal support in the Superior Court of Los Angeles County. Ct. No. PD034625 Alan Friedenthal, Commissioner.
Larry Epstein and Alan M. Goldberg for Respondent.
ZELON, J.
INTRODUCTION
Following an order modifying her spousal support payments, Appellant Gail Goldman appealed, arguing that Respondent James Goldman had failed to establish any material change of circumstance that supported modification. We agree and reverse.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Goldmans’ Stipulated Judgment of Dissolution and Marital Settlement Agreement
James Stephen Goldman (James) and Gail Susan Goldman (Gail) (collectively the Goldmans) were married on August 7, 1988. The couple separated approximately 15 years later and, on October 19, 2005, their marriage was formally dissolved through a stipulated judgment that incorporated a marital settlement agreement (MSA or the Agreement). Under the terms of the MSA, James was to pay Gail $5,000 a month for spousal support, which would be “reduced proportionally” by any “reduction in Husband’s gross income from his current gross income.” At the time of the dissolution, James’ stipulated monthly income was $13,600, which was derived primarily from the following sources: $2,000 in salary, $8,000 in “disability insurance” and approximately $3,200 from a disability annuity. James’ disability insurance and disability annuity (collectively disability payments) were the result of policies the Goldmans had purchased with community assets to protect against the possibility that James, who had Parkinson’s disease, might become disabled.
Because the parties share the same last name, we refer to them by their first names for the sake of clarity only. No disrespect is intended. (See, e.g., In re Marriage of Berger (2009) 170 Cal.App.4th 1070, 1073, fn. 1.)
The facts regarding the specific nature of James’ disability payments are in dispute. According to Gail’s declarations, the payments originated from a disability insurance policy and a disability annuity. James, however, alleges that the payments are the result of a settlement of a lawsuit that the Goldmans brought against their insurers for refusing to honor the disability policy and annuity. James has not submitted any documentary evidence that the payments were actually the result of a settlement. As explained in more detail below, this factual dispute does not affect our analysis.
The MSA also divided the Goldmans’ property. James was awarded the “Reassure America Life Insurance Company Disability Income Policy” and the “United of Omaha Life Insurance” annuity, which were the source of his disability payments. James was also awarded the family residence. Gail received a $250,000 equalizing payment for the residence that was to be paid in three increments.
The Goldmans’ MSA included various additional terms including an acknowledgment that “it is the goal of this state that each party shall make reasonable good faith efforts to become self-supporting within a reasonable period of time as provided for in Family Code Section 4320. The failure to make good faith efforts may be one of the factors considered by the court as a basis for modifying or terminating support.” The parties further acknowledged that “the provisions of this Agreement are entered into in mutual consideration of the acts of the other party, and each party hereby acknowledges the fairness and adequacy of such consideration.”
B. James’ Order to Show Cause to Modify the Spousal Support Payments
a. James’ request to modify the spousal support payments
In January of 2008, Gail received a letter from Larry Epstein, who replaced the attorney that James had retained to draft the MSA. Epstein informed Gail that, after reviewing the parties’ Agreement, he had determined that the level of income originally used to calculate the monthly spousal support payment “included both taxable and non-taxable income, which it appears the parties agreed to use when arriving at the amount of spousal support payable to you.” The letter went on to argue that James’ prior attorney had erred in characterizing the disability payments as income and “as such, his total income is substantially less than originally contemplated by parties and counsel.” The letter further claimed that James’ Parkinson’s disease had “progressed to the point that it requires more medical attention and more frequent hospital visits.” Epstein contended that because James’ income had been miscalculated in the MSA and his disease had worsened, James was entitled to a $2,500 reduction in the monthly spousal support payment.
Shortly thereafter, in March of 2008, James filed an Order to Show Cause for modification of the spousal support payments that raised essentially the same arguments articulated in Epstein’s letter. Specifically, James argued that his disability payments “do not represent income” and, as a result, he had experienced “a significant reduction in his income... from that which existed at the time of the stipulated judgment.” In a subsequently-filed declaration, James explained to the court that, when drafting the MSA, his former attorney had improperly treated the disability payments as income and that “this error in calculation... should not continue to be held against me by this Court or by the Petitioner.”
The material filed in support of the OSC identified two additional factors that justified a reduction in spousal support. First, James alleged that his Parkinson’s disease had worsened, causing him to spend more “time in the hospital and incurring more and more medical expenses.” Second, James urged the court to consider that the 2005 Dissolution Judgment “sets forth the fact that [Gail] needed to make good faith efforts to become self-supporting within a reasonable period of time, ” which, according to James, Gail had not done. James requested that, as a result of Gail’s failure to obtain employment, the court “impute income to [her] in the amount of $1,400.00 per month.”
2. Gail’s opposition to James’ OSC
On April 7, 2008 Gail filed an opposition to the OSC, arguing that James’ attempt to re-characterize his disability payments as non-income did not constitute a change in circumstances because, at the time of the MSA, the parties had agreed to treat it as part of his income. She further argued that regardless of whether James’s health had deteriorated, “he is still functioning well enough to work at a teaching job and he does not show that his current medical treatments are greater than what he previously had.”
Gail also provided evidence that she had tried to find work. Gail stated that after being been laid off from a sales job in 2005, she had applied for numerous other positions, worked with four employment placement agencies and sought out educational opportunities to improve her marketability. Despite these efforts, Gail, who lacked a college degree and had limited marketable skills, was unable to find work. Gail also informed the court that, since the dissolution of her marriage, she had spent several months caring for her sick father and had been in a serious car accident that left her without transportation. Finally, Gail detailed the hardship that would ensue if her monthly spousal payments were reduced, alleging that the payments were her sole source of income and that a reduction would leave her with insufficient resources to pay her mortgage.
C. The Trial Court’s Order Granting Modification
On September 29, 2008, Commissioner Alan Freidenthal held a hearing on James’ OSC. Commissioner Freidenthal began the hearing by asking Gail to explain what efforts she had made to find employment during the two and a half years since the parties dissolved their marriage. Gail, who was self-represented at the hearing, stated that she had applied for several jobs and provided the names of five businesses she had applied to in the preceding 30 days. She also stated that she had taken care of her sick father for nine months and had been helping out her children. The court, however, remained “perplex[ed]” as to why Gail had not yet secured employment and went on to rule that “for 27 of the past 36 months... [Gail] sought, ... but hasn’t obtained gainful employment, the court reduces the spousal support to $2,500 per month retroactive to the date of filing of the OSC.” A subsequent minute order reiterated that “The Court finds that the respondent has, for a long period of time, the ability to find gainful employment. The Court modifies spousal support to $2,500 each month.”
The hearing transcript suggests that Gail’s attorney withdrew as counsel days before the hearing because of a disagreement over legal strategy.
Following the hearing, the court issued a Statement of Decision that made numerous findings in regards to both Gail and James. First, the court found that Gail “did not provide any pleadings or other documentation to the court, or to Respondent’s counsel, of her attempts to find employment, since she last was employed on October 11, 2005.” It also found that Gail “has the ability to engage in gainful employment” and “has not made reasonable efforts to seek and obtain gainful employment.” The court found that James, in turn, had demonstrated several “significant change in [his] circumstances, ” including: (1) a deterioration in health “due to the effects of Parkinson’s disease;” (2) a significant reduction in the number of days that he could work each month, and; (3) a significant reduction in monthly income, which had dropped from $13,600 in 2005 to $5,256.50 in 2008. The court’s Statement concluded that James’ “change of circumstances justifies a modification in the amount of spousal support paid to the Petitioner, from $5,000 per month, to $2,500 per month.”
Gail initially requested that the court issue a Statement of Decision, which was then drafted by James’s attorney. Gail objected to the content of James’s proposed Statement, arguing that it contained a series of conclusory assertions unsupported by any evidentiary citations. The court, however, approved the Statement without modification.
Gail now appeals the modification order, arguing that James failed to establish any material change in circumstance that justified reducing her monthly spousal support payment.
DISCUSSION
1. Standard of Review
A trial court’s order modifying a spousal support award is reviewed for abuse of discretion. (In re Marriage of Shaughnessy (2006) 139 Cal.App.4th 1225, 1235.) “We review the record to determine if the court’s order is supported by substantial evidence and if a reasonable court could have made the order. If so, we will affirm. [Citation.]” (Mendoza v. Ramos (2010) 182 Cal.App.4th 680, 684 (Mendoza).)
2. The Trial Court Improperly Modified the Spousal Support Agreement
A spousal support order “is modifiable only upon a material change of circumstances since the last order. ‘Change of 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.” (In re Marriage of West (2007) 152 Cal.App.4th 240, 246.) As the moving party, James “bears the burden of proof of showing changed circumstances that justify a new court order.” (In re Marriage of Bardzik (2008) 165 Cal.App.4th 1291, 1303.)
The court’s Statement of Decision indicates that the trial judge found two material changes of circumstance that supported modification of the Goldmans’ original spousal support agreement. First, since entering into the MSA, James’s monthly income had decreased significantly. Second, James’s health had deteriorated due to the effects of Parkinson’s disease, which reduced his ability to work. It appears from the record that, in making its ruling, the court also considered Gail’s failure to obtain employment during the two and a half years since the parties signed the MSA. As explained in more detail below, we do not believe there is substantial evidence to support any of these alleged changes in circumstance.
The court’s Statement of Decision, which we treat as the appealable order in this case (see Alan v. American Honda Motor Co., Inc. (2007) 40 Cal.4th 894, 901[statement of decision constitutes appealable order if it is “signed and filed and does, in fact, constitute the court’s final decision on the merits”]), includes findings that Gail did not make reasonable efforts to seek gainful employment. However, it does not include language indicating that this factor constituted a material change of circumstance warranting modification. The hearing transcripts and minute order, on the other hand, suggest that the court did consider Gail’s failure to obtain employment when modifying the parties’ support agreement. We therefore address this issue for the purposes of remand.
a. James’s alleged reduction in income
The primary “change of circumstance” that James set forth in his OSC was a significant reduction in his income. Specifically, James argued that, since entering the MSA, his monthly income had dropped from $13,600.00 to about $5,200.00. James does not dispute that the gross income figure in the MSA – $13,600 a month – included his disability payments. Nor does he dispute that if his disability payments are factored in, the amount of money he currently receives on a monthly basis is approximately equal to the amount he was receiving at the time the parties signed the MSA. James contends, however, that, when negotiating the MSA, his former attorney erred in characterizing the disability payments as income and, as a result, his income is actually much less than what was stated in the MSA. More specifically, James argues that his former attorney failed to recognize that: (1) his disability payments are the result of a settlement of a law suit that the Goldmans brought against his insurers and, (2) under In re Marriage of Rothrock (2008) 159 Cal.App.4th 223, such settlement payments should not be treated as income when calculating support orders.
For further discussion regarding the parties’ dispute over the nature of James’s disability payments, see footnote 2.
James’s argument overlooks the fact that, regardless of whether the principles of In re Marriage of Rothrock apply to the type of support order at issue here, in this case the parties agreed that James’s disability payments would be treated as part of his gross income when they negotiated the MSA. The Goldmans’ MSA constitutes a contract and we are bound to “‘give effect to the intent and reasonable expectations of the parties as expressed in the agreement.’” (In re Marriage of Dietz (2009) 176 Cal.App.4th 387, 398.) Moreover, we must “presume[] 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.” (In re Marriage of Hentz (1976) 57 Cal.App.3d 899, 901.) This is of particular significance here given that the MSA specifically states that the parties entered into the Agreement “in mutual consideration of the acts of the other party, and each party hereby acknowledges the fairness and adequacy of such consideration.” Given this acknowledgment, we cannot assume that Gail would have entered into the same marital settlement terms if James’s disability payments were not factored into his gross income. (See Modglin v. Modglin (1966) 246 Cal.App.2d 411, 415 [“We have no right to assume that the parties when they made their stipulation for alimony... did not know precisely what they were doing. We have no way of knowing what multitude of factors, or even what single consideration, entered into those stipulations”].) James may be right that, when negotiating the MSA, his former attorney should have tried to exclude the disability payments as a source of income. But we cannot re-write the bargain that was struck. (See e.g., In re Marriage of Aninger (1990) 220 Cal.App.3d 230, 242 [“‘When a court remakes a bargain at the request of one party for no other reason than that party’s later dissatisfaction with the agreement, a court not only diminishes the bargaining process itself, but strays from the judicial restraint essential to a rational judicial process. [Citation.]’”; overruled by statute on another ground as stated in In re Marriage of O’Connor (1997) 59 Cal.App.4th 877.].) Because it is clear that the parties originally contemplated that James’ disability payments would be treated as income for the purposes of the MSA, James’ attempt to re-characterize those payments as non-income does not constitute a material change of circumstance. (See In re Marriage of Dietz, supra, 176 Cal.App.4th at p. 400 [increase in value of retirement accounts did not constitute material change of circumstance because parties contemplated such an increase when they negotiated the stipulated judgment of dissolution].)
In re Marriage of Rothrock held that a personal injury settlement annuity was properly treated as “non-income” when determining a child support payment. (See In re Marriage of Rothrock, supra, 159 Cal.App.4th at pp. 231-235.) Gail argues that Rothrock, which interpreted a statute that defines income for the purposes of child support payments, has no application in the context of spousal support payments. Gail also disputes that James’s disability payments were the result of a personal injury settlement. We need not resolve these legal and factual disputes because they do not affect our analysis.
b. Deterioration in James’s medical condition
The trial court also ruled that James’s deteriorating health constituted a “change in circumstance” that supported modification of the MSA. The case law makes clear, however, that a change in health can only qualify as a material change of circumstance if it “affect[s a party’s] economic situation... since it is the economic relation which is to be affected by the proposed modification.” (Engelberg v. Engelberg (1968) 257 Cal.App.2d 821, 824 [deterioration in petitioner’s eyesight did not constitute change of circumstance where record contained no evidence of economic impact].) James contends that the progression of his Parkinson’s disease negatively affected his economic circumstances by increasing his medical bills and reducing the amount of time that he can work. A review of the record, however, demonstrates that there is insufficient evidence to support those allegations.
Although James contends that his medical expenses went up between 2005 and 2008, his own documents suggest otherwise. Shortly before the parties entered into the MSA, James submitted an “Income and Expense Declaration” (Income Declaration) stating that, in 2005, he paid $1,300 a month for “health insurance premiums” and $200 a month for “health-care costs not paid by insurance.” In March of 2008, James submitted an updated Income Declaration stating that his “health insurance premiums” had dropped to $1,085 a month while his monthly “health-care costs not paid by insurance” remained at $200 a month. Thus, James’s own evidence demonstrates that his monthly health costs actually went down between 2005 and 2008.
James’ 2005 Declaration of Income also states that he paid an additional $1,400 in miscellaneous “medical insurance.” It is unclear whether this $1,400 is duplicative of or in addition to the $1,300 that James listed for “health insurance premiums.” If it is in addition to those premiums, James was actually paying $2,700 a month for medical insurance in 2005.
James’s Income Declarations also indicate that, regardless of whether his health condition forced him to reduce his work schedule, his economic circumstances were not affected. In his 2005 Income Declaration, James listed his monthly salary as $2,000. In the 2008 Income Declaration he stated that he received a monthly salary of $2,520 and derived an additional $1,550 a month in “income from self-employment.” Moreover, between 2005 and 2008, his total monthly expenses dropped from $9,015 to $7,564. This evidence demonstrates that, even if James’ health has deteriorated since 2005, he is currently in a better financial position than he was when the parties entered into the MSA. As a result, he has failed to demonstrate that his change in health qualifies as a material change of circumstance.
It is possible that, at some point in the future, James’ deteriorating medical condition will impact his economic circumstances. However, “[a] court is limited to considering the conditions existing at the time the modification is sought and may not provide for future contingencies which may or may not happen.” (In re Marriage of Cobb (1977) 68 Cal.App.3d 855, 862.)
C. Gail’s failure to make reasonable efforts to become self-supporting
Finally, when modifying the parties’ spousal support agreement, the trial court apparently considered whether Gail had made reasonable efforts to become self-supporting. A supported spouse’s failure to make good-faith efforts to become self-supporting can constitute a material change in circumstances only if there has “been some reasonable advance warning that after an appropriate period of time the supported spouse was expected to become self sufficient or face onerous legal and financial consequences.” (In re Marriage of Gavron (1988) 203 Cal.App.3d 705, 712; see also In re Marriage of Shaughnessy, supra, 139 Cal.App.4th at p. 1238 [“if a court’s initial spousal support award contemplates that a supported spouse will take some action to decrease the need for spousal support following the issuance of the order and the supported spouse fails to take that action, the court may modify the award on the ground of changed circumstances”].) Thus, to establish that Gail’s failure to obtain employment supported a reduction in spousal payments, James had to demonstrate that: (1) Gail was given sufficient warning that, within an appropriate period of time, she was expected to become self-supporting (a “Gavron Warning” (In re Marriage of Gavron, supra, 203 Cal.App.3d at p. 712)), and (2) Gail failed to make reasonable efforts to do so. As explained in more detail below, the record does not contain sufficient evidence to support the court’s finding that Gail failed to make reasonable efforts to become self-supporting.
In his OSC James argued that “the Petitioner has had more than sufficient time to become self-supported” and requested that the court “impute income to the Petitioner in the amount of $1,400 per month.” The trial court apparently agreed, ruling in its minute order that Gail “has, for a long period of time, the ability to find gainful employment. The Court modifies spousal support to $2,500 each month.” The court gave no reasoning as to how it arrived at the $2,500 figure nor did it reference the evidence it relied on in determining that Gail could have earned an income.
As the party moving “to modify an existing order so as to have income imputed to the other [party], ” James “bears the burden of proof of showing that [Gail] has the ability and opportunity to earn that imputed income.” (In re Marriage of Bardzik, supra, 165 Cal.App.4th at p. 1294.) This, in turn, required James to “adduce evidence of vocational abilities and employment opportunities.” (Mendoza, supra, 182 Cal.App.4th at pp. 685-686.) The record is devoid of any such evidence. Instead, James has provided only conclusory, unsupported statements that Gail should have found employment. (See Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 805 [“the trial court... should not[] accept conclusory statements... in the absence of supporting evidence”].) Gail, on the other hand, provided sworn testimony that, since the dissolution of her marriage, she had applied for numerous jobs, worked with multiple employment placement agencies and begun taking online courses to increase her marketability. Thus, rather than demonstrating that Gail had both ability and opportunity to earn the income, the record in this case shows nothing more than that, despite her efforts, Gail was unable to obtain gainful employment. (Mendoza, supra, at p. 686.) Without any evidence regarding Gail’s earning capacity or opportunity to obtain work, the trial court’s decision to impute income to Gail in the amount of $2,500 was arbitrary and must be reversed. (See In re Marriage of Bardzik, supra, 165 Cal.App.4th at p. 1301 [“Without evidence of ability or opportunity to earn the money, the power to impute income would easily devolve into a trial judge’s power to arbitrarily establish a support order at any given level, plucked from mid-air”]; In re Marriage of West, supra, 152 Cal.App.4th at p. 248 [reduction in spousal support order must be based on “reasonable inferences... drawn from the evidence, not mere hopes or speculative expectations”].)
The trial court’s Statement of Decision concludes that Gail “did not provide any pleadings or other documentation to the court, or to Respondent’s counsel, of her attempts to find employment, since she last was employed on October 11, 2005.” This finding is contradicted by the record. Gail filed declarations that described 19 different jobs she applied for and listed four placement agencies she had worked with in an effort to find employment.
The court also failed to consider whether 29 months was a sufficient amount of time for Gail to obtain gainful employment given the 15 year duration of the marriage. (In re Marriage of Dietz, supra, 176 Cal.4th at p. 397 [“‘A trial court considering whether to modify a spousal support order considers the... criteria set forth in Family Code section 4320... [including [¶]... [¶]] The goal that the supported party shall be self-supporting within a reasonable period of time’”].) The California Supreme Court has observed that, in marriages of long duration, a wife’s “willingness... to remain at home limits her ability to develop a career of her own. If the marriage is later dissolved, the wife may be unable, despite her greatest efforts, to enter the job market.” (In re Marriage of Morrison (1978) 20 Cal.3d 437, 452.) As a result of these realities, in cases involving lengthy marriages courts have generally provided the supported spouse a significant amount of time in which to become gainfully employed. (See, e.g., In re Marriage of Beust (1994) 23 Cal.App.4th 24, 29 [court abused its discretion in refusing to extend support payments after 6 years where “[t]he parties’ marriage was of long duration and when it was over [the wife] was in her 50’s and... [had no] experience, training or education to qualify her for employment”]; In re Shaughnessy, supra, 139 Cal.App.4th at p. 1233 [affirming trial court’s decision to reduce spousal payment where parties were married for 15 years, wife had been receiving support “‘for almost 10 years’” and was “‘forewarned by the trial judge that she should be looking at seven years to begin to be self-supporting’”].) At the time of the Goldmans’ dissolution, Gail was almost 50, did not have a college degree, did not have an independent source of income and lacked any marketable job skills. Moreover, at the request of her husband, Gail had spent a large portion of her 15 year marriage in the home. We are not aware of any case in which a court concluded that a similarly-situated supported spouse should have become gainfully employed after a marriage of long duration within the limited time frame at issue here.
A marriage of long duration is generally defined as a marriage of 10 years or more, from the date of marriage to the date of separation. (See Family Code, §§ 4320, subd. (l); 4336.)
For the reasons described above, we overturn the modification order for abuse of discretion. (See In re Marriage of West, supra, 152 Cal.App.4th at p. 246 [“Where there is no substantial evidence of a material change of circumstances, an order modifying a support order will be overturned for abuse of discretion”].)
Because we conclude that James failed to adduce sufficient evidence to establish any material change in circumstance, we need not reach various additional arguments Gail raised in her briefs, including whether the trial court properly considered all of the factors in Family Code section 4320 and whether the court was justified in making the modification order retroactive to the filing of the OSC.
DISPOSITION
We reverse the order reducing support. On remand, the trial court is directed to reinstate the previous spousal support provisions. Appellant shall recover her costs on appeal.
We concur: WOODS, Acting P.J., JACKSON, J.