27 Cal.App.5th 1025
Cal. Ct. App.2018Background
- Married 1991; Launa (stay-at-home parent) filed for dissolution in 2012 after 21 years; youngest child turned 18 and graduated in 2016.
- David worked for and ultimately owned 50% of Huddleston Crane Services, Inc. (and 50% of H.C.S. Mechanical, Inc.) after transfers/reorganizations by his father; trial court found David’s interest was a gift and separate property.
- Trial court awarded temporary child support (2013), continued in a June 2016 judgment ($1,634/mo for daughter until statutory termination), and ordered permanent spousal support ($2,700/mo starting April 1, 2016).
- Key contested financial items: (a) whether David’s federal/state income tax refunds should be included in income for child/spousal support; (b) whether voluntary 401(k) and HSA contributions should be excluded from income; (c) characterization of rental payments to David’s mother and net rental income.
- Trial court excluded tax refunds and excluded voluntary retirement/HSA contributions from income; it found $7,650/mo net rental income (upheld on appeal).
- Trial court denied Launa additional attorney fees beyond a $15,000 pendente-lite award; appellate court held the trial court failed to make mandatory findings under Fam. Code §2030 and that an award was required on this record.
Issues
| Issue | Plaintiff's Argument (Launa) | Defendant's Argument (David) | Held |
|---|---|---|---|
| Characterization of David’s business interest | Interest was not a gift or, if a gift, was remuneratory and therefore community property | Interest was gratuitously transferred by Father and is David’s separate property | Upheld: substantial evidence supports finding of gift and that it was not remuneratory; interest is separate property |
| Child support calculation — inclusion of income tax refunds | Tax refunds (federal/state) received by David should be treated as income available for child support; trial court erred by excluding them | Mootness: obligations ended at child’s graduation; refunds belong to corporation/not available | Reversed in part: refunds must be included where withholdings/estimates were deducted; issues not moot because appellate court can grant practical relief (including retroactivity) |
| Child/spousal support — treatment of voluntary 401(k)/HSA contributions | Voluntary retirement and HSA contributions are funds available to pay support and should be included in income | Contributions reduce taxable income/cash flow and were properly excluded (or belong to corporate structure) | Reversed in part: generally voluntary 401(k) and HSA contributions should be included in income for support unless trial court makes explicit findings justifying exclusion; corporate ownership assertions rejected for refunds |
| Attorney fees under Fam. Code §2030 | Trial court failed to make required findings re: disparity in access/ability to pay; given disparity, additional fees were mandatory | Court concluded both parties had resources from asset division and denied further fees | Reversed: trial court erred by failing to make statutory findings; record demonstrates disparity and ability of David to pay for both sides, so attorney-fee award is mandatory; remand to fix amount and award appellate-phase fees as appropriate |
Key Cases Cited
- Beam v. Bank of America, 6 Cal.3d 12 (Cal. 1971) (profits from separate property may require apportionment to community when spouse’s labor is more than minimal)
- Downer v. Bramet, 152 Cal.App.3d 837 (Cal. Ct. App. 1984) (remuneratory gifts given in recognition of services may be characterized as community property)
- In re Marriage of Cheriton, 92 Cal.App.4th 269 (Cal. Ct. App. 2001) (child support awards reviewed for abuse of discretion; must follow statutory guideline)
- Le Francios v. Goel, 35 Cal.4th 1094 (Cal. 2005) (trial court has inherent power to reconsider prior orders before entry of judgment with notice/opportunity to be heard)
- In re Marriage of Cryer, 198 Cal.App.4th 1039 (Cal. Ct. App. 2011) (retroactivity of modified child support and procedures)
- In re Marriage of Rossin, 172 Cal.App.4th 725 (Cal. Ct. App. 2009) (character of property fixed at time of acquisition)