Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. CH 2040428
Haerle, J.
I. INTRODUCTION
This is our third opinion regarding an ongoing family law dispute between Mervin Mark Sarchet (Mark) and his former spouse, Wensen Tang Sarchet (Wensen). The parties divorced in 1999 but have continually litigated various property and child support issues. The present appeal is from an order modifying child support, which was entered after this court reversed a prior support order and remanded the case with instructions to the trial court. (In re the Marriage of Wensen and Mervin Mark Sarchet (Aug. 9, 2007, A114901 [nonpub. opn.] (See Sarchet I).) Unfortunately, we find that the order must be reversed again because the trial court has failed to comply with our instruction on remand in Sarchet I.
II. STATEMENT OF FACTS AND PROCEDURAL HISTORY
We limit our discussion, as best we can, to the circumstances relevant to the child support orders that are at issue in this appeal. A detailed summary of the lengthy litigation history generated by these parties is set forth in our prior opinion in Sarchet I.
Mark and Wensen share legal custody of their four minor children, although Mark has primary physical custody. Since the divorce, Mark has experienced employment and financial problems and has been through bankruptcy. Wensen, whose family has significant assets abroad, has frequently maintained that she has no income. However, she also claimed that her family funds made her the primary financial provider during the marriage and, as a result, was credited with significant separate property interests in the property of the marriage.
On January 24, 2005, Mark filed a motion for a modification of child support. Mark sought to modify the then-existing child support order, which provided that Wensen did not have to pay any child support for the couple’s four children, whose ages ranged from 7 to 12 years old. Mark alleged that Wensen had misled the court about her financial situation, that she was “very wealthy, supported by offshore assets, and chooses not to work.” Mark also alleged that the former family home, a residence located on Cloverleaf Court in Fremont (Cloverleaf Court) had recently been sold by the trustee of Mark’s bankruptcy estate, and the bankruptcy court had authorized the trustee to pay Wensen $745,000 for her separate property interest in Cloverleaf Court. Mark alleged that Wensen could earn significant interest income by investing that money.
Mark’s motion to modify child support was one of three motions that were the subject of a protracted court trial in 2005 and 2006 before the Honorable Jacob Blea. The court also heard and ruled on Mark’s motion for damages for breach of fiduciary duty based on allegations that Wensen wrongfully delayed the sale of Cloverleaf Court in order to cause Mark financial harm, and Mark’s motion for attorney fees for bad faith litigation tactics. The trial court set forth its findings and orders after trial in a 28-page order filed April 25, 2006 (the April 2006 order).
The April 2006 order required Wensen to pay Mark (1) $536,452.28 as damages for her breach of fiduciary duty; (2) child support in the amount of $741.00 per month, retroactive to January 24, 2005, and (3) $100,000 for attorney fees incurred by Mark during the litigation culminating in the trial.
B. The April 2006 Order Modifying Child Support
The April 2006 order indicates that the trial court was persuaded by Mark’s evidence that Wensen had misled the court about her financial income and resources. Thus, for example, the order states: “Respondent provided this Court with substantial evidence of the Petitioner’s ability to earn income from employment, rent, mortgage free accommodations, access to family monies for her living expenses and income from her ‘assets’ to support findings by this Court that Petitioner has the ability to pay guideline child support....”
The order contains a somewhat confusing discussion of the trial evidence relevant to the support issue which is peppered with numerous findings adverse to Wensen. Several findings pertain to Wensen’s access to and use of funds in a Bank of America checking account held in her mother’s name. Among other things, the court credited testimony establishing that Wensen forged her mother’s signature on checks drawn from the account and used the money to purchase goods and services for herself. The April 2006 order also contains statements that could be construed as findings that Wensen had “access to $10,937.74 per month from said bank account,” and that Wensen went “to great lengths to hide her true standard of living” from the trial court “in an effort to continue to avoid her legal obligation to provide support to her children.”
In light of the evidence before it, the trial court exercised its discretion to impute income to Wensen from three sources. Specifically, the lower court found that Wensen could have earned (1) $2,000 per month had she elected to work, (2) $1,000 per month of rental income from her live-in boyfriend, and (3) $3,325 per month as interest income if she had invested her share of the proceeds of the Cloverleaf Court sale in an income producing asset. Including these amounts as part of Wensen’s income, the court ordered Wensen to pay Mark child support in the amount of $741.00 per month, retroactive to January 24, 2005, the date Mark filed his modification motion.
C. Sarchet I
Wensen appealed the April 2006 order. In Sarchet I, this court affirmed the award of damages for breach of fiduciary duty and the attorney fees award. However, we reversed the order modifying child support. We concluded that the drafted April 2006 order incorrectly failed to support the imputation of interest income to Wensen from the proceeds of the sale of Cloverleaf Court. Although we expressly recognized that the court enjoyed wide discretion in this area, we simply could not satisfy ourselves that the court had properly exercised that discretion. Specifically, we identified two distinct problems with the analysis set forth in the April 2006 order.
As we explained in Sarchet I, “The modification of a child support order is reviewed for abuse of discretion. [Citation.] When determining each parent’s income for purposes of determining the amount of child support, the trial court is not limited to a consideration of the parent’s actual income. [Citation.] ‘The court may, in its discretion, consider the earning capacity of a parent in lieu of the parent’s income, consistent with the best interests of the children.’ ([Fam. Code,] § 4058, subd. (b).) ‘A trial court’s decision to impute income to a parent for child support purposes based on the parent’s earning capacity is reviewed under the abuse of discretion standard.’ [Citation.]” (Sarchet I, supra, at pp. 18-19.)
First, the lower court had expressly found that Wensen used the proceeds of the Cloverleaf Court sale to purchase her current residence, a home located on Sawleaf Street in Fremont (Sawleaf). However, the court did not find that Sawleaf was purchased for investment purposes. Rather, the undisputed evidence showed that Sawleaf was the Sarchet children’s family home when they stayed with their mother. These circumstances indicated to us that the trial court may have penalized Wensen for using the Cloverleaf Court proceeds to purchase a home for her children instead of investing the funds in an income producing asset. (Sarchet I, supra, at p. 19)
Such a penalty would be inconsistent with Family Code, section 4058, subdivision (b), which states that the court “may, in its discretion, consider the earning capacity of a parent in lieu of the parent’s income, consistent with the best interests of the children.”
The second problem with the imputation of interest income from the proceeds of the Cloverleaf Court sale was that the lower court was misled by an erroneous legal analysis that appeared in Mark’s written closing argument and was copied verbatim into the April 2006 order. As we observed in Sarchet I, that order was not “an exemplary piece of writing,” primarily because significant portions of it had been copied verbatim from Mark’s written closing argument. (Sarchet I, supra, at p. 9.) Unfortunately, by cutting and pasting Mark’s argumentative pleading into the April 2006 order, the court created an order that was not only confusing and difficult to decipher, but also contained erroneous legal analysis. (Id. at pp. 19-21.)
Specifically, the trial court appeared to have accepted without question Mark’s erroneous contention that imputing income from money that Wensen used to purchase a family home was “consistent with the holding” of In re Marriage of Destein (2001) 91 Cal.App.4th 1385 (Destein). As we explained more fully in Sarchet I, “Destein, by express language, does not approve the imputation of interest income from equity in a family home.” (Sarchet I, supra, at p. 20.) Our independent analysis of relevant authority, including Destein, led us to conclude that “a parent’s home is not properly characterized as a real estate investment for purposes of calculating income, at least absent some compelling circumstance.” (Id. at p. 21.)
The trial court did not expressly consider whether there were compelling circumstances to justify characterizing Wensen’s current residence as a real estate investment for purposes of calculating income. And our problems interpreting the April 2006 order precluded us from resolving the issue ourselves. Although the record clearly showed that the lower court was persuaded by Mark’s evidence that “Wensen had been less than candid about her assets,” it appeared equally clear that the lower court had been misled by Mark’s erroneous legal analysis. (Sarchet I, supra, at pp. 21-22.) Under these “circumstances,” we found that “the trial court did not properly exercise its discretion with respect to the modification of the child support order and that this case must be remanded so that the court can recalculate Wensen’s support obligation.” (Id. at p. 22.)
D. The March 2008 Order
After this case was remanded to the lower court, Mark filed an application for an order to show cause for modification of child support. Mark requested that the court recalculate Wensen’s gross monthly income as required by our remand order in Sarchet I. Mark argued that the court should impute income to Wensen for purposes of calculating her support obligation, but expressly acknowledged that interest income should not be imputed from the proceeds of the Cloverleaf Court sale. However, Mark asked the court to impute income in the amount of $10,000 per month, based on evidence presented at the 2005-2006 trial regarding Wensen’s access to and use of funds in the Bank of America account held in the name of Wensen’s mother.
Wensen opposed Mark’s request for an order requiring her to pay child support. She argued that, in April 2006, the trial court implicitly found that the Bank of America funds were not part of her income and Mark had not appealed that ruling or otherwise challenged the April 2006 order. According to Wensen, the sole task of the lower court on remand was to eliminate the imputed interest income from the calculations that formed the basis of the April 2006 order. The resulting recalculation, according to Wensen, required Mark to pay her child support in the amount of $186 per month.
Two short hearings on this matter were conducted by the Honorable Alice Vilardi. At the first hearing, on February 1, 2008, Mark objected that the matter should be re-assigned to Judge Blea. The matter was continued and, after the parties submitted legal briefs, the court filed an order on March 14, 2008, pursuant to which it denied Mark’s request that the child support modification matter be heard by Judge Blea.
A second hearing was held on March 21, 2008. The transcript of that hearing indicates that Judge Vilardi may have been confused about the procedural nature of the matter before the court. After a brief discussion with counsel, the court clarified that both parties agreed that the remittitur did not require the court to conduct a new evidentiary hearing on the motion for modification of child support. The parties disagreed, however, as to the nature of the remand instruction set forth by this court in Sarchet I. Mark argued that, because the modification of child support order had been reversed, the lower court should consider all the evidence from the 2005-2006 court trial, including evidence pertaining to the Bank of America funds, when re-calculating Wensen’s support obligation. Wensen, on the other hand, took the position that the only part of the April 2006 order that was reversed was the specific order imputing interest income from the proceeds of the sale of Cloverleaf Court, and that was the only aspect of the income calculation that was to be changed pursuant to the remand instructions in Sarchet I.
On March 24, 2008, the court filed an order modifying child support by requiring Mark to pay Wensen child support, retroactive to January 24, 2005, the date of Mark’s original motion for a modification of child support (the March 2008 order). The March 2008 states: “The court finds that it is required to recalculate petitioner’s support obligation by omitting imputation of interest income, but making no other changes in the calculation incorporated in the trial court’s decision of April 25, 200[6], that was the subject of the appeal in this action. A DissoMaster setting the support as directed in the remittitur is attached as Exhibit A. [¶] Child support payable by [Mark] to [Wensen] is established at $942, effective January 24, 2005.”
On April 21, 2008, the court filed an order correcting a clerical mistake in the March 2008 order by issuing a revised DissoMaster that reflected the fact that the parties have four and not five children and that certain rental income was taxable. Although the April 21, 2008, order does not expressly change the amount of child support Mark was ordered to pay, Mark contends (and Wensen does not dispute) that the clerical corrections reduced his support obligation to $173 per month.
III. DISCUSSION
Mark contends the March 2008 order must be reversed because the trial court failed to comply with this court’s remand instructions in Sarchet I.
“When an appellate court’s reversal is accompanied by directions requiring specific proceedings on remand, those directions are binding on the trial court and must be followed.” (Butler v. Superior Court (2002) 104 Cal.App.4th 979, 982.) Indeed, reversal of a trial court order or judgment after remand is required if the lower court’s variance from appellate directions was material. (Ibid; see generally Eisenberg, et al., Cal. Practice Guide: Civil Appeals & Writs (The Rutter Group 2008) ¶ 14:149-14:150.1, and authority cited therein.) A material variance is one that conflicts with the intent of the prior judgment or order as reflected in the opinion when read “as a whole.” (See In re Candace P. (1994) 24 Cal.App.4th 1128, 1131-1132 [the materiality of a trial court’s departure from appellate instructions on remand requires a consideration of the appellate opinion as a whole in order to determine the intent of the judgment]; Stromer v. Browning (1968) 268 Cal.App.2d 513, 518-519 [even unambiguous language is trumped by a contrary intention established by a consideration of the appellate opinion “as a whole.”].)
Mark construes our disposition as a reversal of the April 2006 order modifying child support with a direction to reconsider the motion in light of all the evidence presented at the 2005-2006 trial. Wensen, on the other hand, construes our instruction as limiting the trial court’s authority on remand to the ministerial act of deducting the imputed interest income figure from the court’s prior calculation of Wensen’s income. The trial court adopted Wensen’s interpretation of our remand instruction. It found that the disposition in Sarchet I “required [the trial court] to recalculate petitioner’s support obligation by omitting imputation of interest income, but making no other changes in the calculation incorporated in the trial court’s decision of April 25, 200[6], that was the subject of the appeal in this action.”
We hold that the trial court’s interpretation of our instruction on remand was erroneous and that its course of conduct constituted a material variance from our remand instruction in Sarchet I. Several factors support our conclusion.
First, as a technical matter, our explicit instruction on remand was to recalculate Wensen’s support obligation. However, the March 2008 order requires Mark to pay child support for the relevant period. That fact should have been noteworthy to the trial court, since even a cursory review of our decision in Sarchet I reflects that there was no motion before the trial court for an order requiring Mark to pay child support and that such an outcome would conflict with all of the evidence credited by the trial court in the April 2006 order.
Second, as a practical matter, if our only intention in Sarchet I had been to eliminate the imputed interest income from the trial court’s April 2006 calculation of Wensen’s income for the relevant time period, our disposition would have been to modify the support order to strike that figure. Instead, we reversed the order modifying child support because the poorly drafted April 2006 order prevented us from concluding that the imputation of income to Wensen resulted from a proper exercise of the trial court’s discretion. Our language of reversal was another strong indication that our intent was to put this matter back before the trial court.
Finally, to the extent our instruction was ambiguous, an examination of our opinion as a whole would have enlightened the court as to the intent of our judgment. As noted above, the order appealed in Sarchet I was the culmination of a protracted trial which involved three separate motions by Mark all of which the lower court resolved in his favor. Although we were critical of the quality of the April 2006 order, our opinion confirms that the order contained sufficient findings to support significant financial damages awards against Wensen. Furthermore, with respect to the one order that we did reverse, the child support order, Wensen did not even dispute the trial court’s express findings pertaining to her misrepresentations regarding her financial situation. It was against this backdrop that we addressed the discreet issue pertaining to the imputation of interest income based on the proceeds of the sale of Cloverleaf Court. We found that the court was likely misled by Mark’s erroneous legal arguments and thus failed to properly exercise its discretion with respect to the imputation of interest income to Wensen. By reversing the support order rather than simply modifying it, we clearly intended for the court to revisit the entire subject of child support and make a new ruling based on the evidence presented at the 2005-2006 trial.
Our conclusion that the March 2008 order must be reversed makes it unnecessary for us to address the remaining issues raised by these parties in their appellate briefs. For example, Mark contends that the lower court erred as a matter of law by refusing to re-assign this case to Judge Blea. Wensen contends Mark waived this claim of error by failing to appeal from the March 14, 2008, order denying Mark’s request that Judge Blea hear the matter. Even if the March 14, 2008, order is subject to review in the context of this appeal, that order is moot because, on remand, the court will make a new determination as to which judge is in the best position to reconsider the evidence presented at the 2005-2006 trial and to make a ruling on Mark’s January 2005 motion for a modification of child support.
IV. DISPOSITION
The March 24, 2008, order is reversed. This case is remanded to the trial court for further proceedings consistent with the foregoing opinion and our opinion in Sarchet I. Each party is to bear their own costs on appeal.
We concur: Kline, P.J., Lambden, J.
One matter that was discussed in Sarchet I spawned another piece of litigation which led to a second appeal that we recently resolved in In re the Marriage of Wensen and Mervin Mark Sarchet (March 18, 2009, A120975) [nonpub. opn.]).