Filed 10/4/17 Marriage of Brown CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

In re the Marriage of ROBERT S. and PATRICIA P. BROWN.	H043739 (San Benito County Super. Ct. No. FL-09-0016)
ROBERT S. BROWN, Appellant, v. PATRICIA P. BROWN, Respondent.

Robert S. Brown appeals from an order after judgment of marital dissolution, filed June 20, 2016, which (1) granted a reduction in his obligation to pay spousal support but not to the extent he requested and (2) denied his request to end his obligation to pay for health insurance coverage for his former wife, Patricia P. Brown. In his brief, filed in propria persona, Robert contends that the trial court’s findings were not supported by the evidence, that the court abused its discretion by requiring him to pay amounts that in total exceeded his net take home pay, and that the court “committed prejudicial error” by not considering and applying all relevant factors set forth in Family Code section 4320.[1]

We find no error and affirm.

I

Procedural History

A judgment of marital dissolution was entered in March 2011. The parties’ marital settlement agreement (MSA) was expressly incorporated into the judgement and attached thereto. The judgment ordered spousal support and property division as set forth in their MSA.

Under the judgment incorporating the MSA, Robert was required to pay Patricia monthly spousal support of $9,000.[2] It provided for prospective modification of spousal support by a court. The agreed division of community property required Robert to make an equalizing payment of $500,000 payable without interest over a period of 12 years with minimum annual payments of $25,000, which, if paid monthly, was approximately $2,083 per month. Robert was also required to pay the cost of maintaining private health insurance coverage for Patricia, up to the cost of COBRA coverage, until Patricia obtained health insurance from Medicare. Patricia was made responsible for her “co‑pays, deductibles and any other costs not covered by the current plan.”

In April 2016, Robert filed a written request for modification of a February 11, 2016 order directing him to pay monthly spousal support in the amount of $4,500 and $903 for health insurance coverage.[3] He requested that spousal support be reduced to $1,500 and that “he be granted relief from the court-ordered health insurance payments to [Patricia], as he no longer ha[d] the ability to pay.” He contended that the payments to maintain health insurance coverage were a form of support and modifiable based on changed circumstances.

In support of his request for modification, Robert filed an income and expense declaration, dated April 13, 2016, and an amended income and expense declaration, dated April 26, 2016. Both reported that his gross monthly income was $7,083 from a new job with K Trader, Inc., that had begun on April 1, 2016 and involved produce sales. Both stated that his average monthly salary was $7,865. In both, Robert reported that his businesses had failed. With respect to self-employment income, both stated that “[a]ll enterprises ha[d] been dissolved or [had] suspended operations.” In both, Robert reported assets in accounts and $93,000 in other property, including a 401(k) and a “$75k garlic farm investment.” The original income and expense declaration reported $27,468 in accounts whereas the amended declaration reported only $2,000 in accounts. In the original income and expense declaration and in his original supporting declaration, Robert reported total monthly expenses of $5,537. In his amended declaration, he reported total monthly expenses of $7,620, which included approximately one-twelve of the minimum annual equalizing payment ($25,000 $2,083) owed to Patricia. Both declarations stated that Patricia was unemployed.

In a separate written declaration in support of his modification request, Robert indicated that, as of April 1, 2016, he was employed by K Trader in the area of produce sales and that he earned a monthly “base salary” of $7,083. Robert asserted that he could no longer afford to pay $4,500 for spousal support and $903 for Patricia’s health insurance coverage. He requested that his payments for health insurance coverage be deemed spousal support and that his spousal support obligation be reduced to $1,500.

A “To Whom it May Concern” letter from the president of K Trader verified his employment and his current annual salary of $85,000. It described Robert as having “expertise in the industry.”

Robert’s federal individual income tax return for 2015 listed his occupation as a “produce broker.” An income of $94,380 (wages, salaries, tips, etc.) was reflected on line 7 of his 2015 tax return. The return also claimed a nonpassive loss from S Corporations of $565,860 and reported zero taxable income.

At the May 10, 2016 hearing on Robert’s modification request, his counsel altered the request, asking for spousal support to be reduced “to zero after balancing the hardships.” Robert’s counsel argued that Robert made about $7,000 a month and had a net disposable income of $5,200 and that Robert could not “pay spousal support of $4,500, meet his other contractual obligations, and live.”

At the hearing, the parties agreed that the funds in the trust account of Robert’s attorney (approximately $16,000) would be paid to Patricia as a partial payment of the overdue 2015 equalizing payment. The parties also stipulated that Robert owed Patricia $2,000 for overdue payments for health insurance coverage, that Robert would pay that amount on April 30, 2017, and that debt would not accrue interest unless Robert defaulted on the April 30, 2017 payment.

The court reduced Robert’s spousal support obligation to $3,500 effective June 1, 2016, but it did not reduce that obligation to $1,500 as originally requested by Robert or to zero as requested at the hearing. The court made clear that Patricia could seek an increase in spousal support if Robert began working for other companies, he revived his businesses, or his investment paid off. It did not eliminate Robert’s obligation to separately pay for private health care coverage.

“Findings and Order After Hearing,” prepared by Robert’s counsel, was filed on June 20, 2016.

II

Discussion

A. Robert’s Request for Modification of Spousal Support Obligation

With certain exceptions, “a support order may be modified . . . at any time as the court determines to be necessary.” (§ 3651, subd. (a).) “ ‘A modification of spousal support cannot be granted in the absence of proof of a change in circumstances. However, the converse is not true; a showing of changed circumstances does not necessarily mandate a modification of spousal support.’ (In re Marriage of Poppe (1979) 97 Cal.App.3d 1, 10.)” (In re Marriage of Khera and Sameer (2012) 206 Cal.App.4th 1467, 1484.)

“The moving party bears the burden of establishing a material change of circumstances since the last order was made in order to obtain modification of the spousal support order. [Citations.]” (In re Marriage of Stephenson (1995) 39 Cal.App.4th 71, 77.) “ ‘Circumstances accounted for in the previous order cannot constitute a change of circumstances. [Citation.]’ [Citation.]” (In re Marriage of Khera and Sameer, supra, 206 Cal.App.4th at p. 1476.)

As the moving party, Robert had both the burden of proof and the burden of producing evidence. (Evid. Code, §§ 500, 550; see Evid. Code, § 300; § 210; Cal. Rules of Court, rule 5.2(d) & (e).) “[T]he burden of proof means the obligation of a party to produce a particular state of conviction in the mind of the trier of fact as to the existence or nonexistence of a fact. See Evidence Code §§ 115, 190. If this requisite degree of conviction is not achieved as to the existence of a particular fact, the trier of fact must assume that the fact does not exist. Morgan, Basic Problems of Evidence 19 (1957); 9 Wigmore, Evidence § 2485 (3d ed. 1940).” (Cal. Law Revision Com. com., 29B pt. 1B West’s Ann. Evid. Code (2011 ed.) foll. § 500, p. 309.) “In the case where the trier of fact has expressly or implicitly concluded that the party with the burden of proof did not carry the burden and that party appeals, it is misleading to characterize the failure-of-proof issue as whether substantial evidence supports the judgment.” (In re I.W. (2009) 180 Cal.App.4th 1517, 1528.)

B. Review of Order Modifying Spousal Support

“The trial court has broad discretion to decide whether to modify a spousal support order. [Citation.] On appeal, we review the trial court’s modification decision for abuse of discretion.” (In re Marriage of Tydlaska (2003) 114 Cal.App.4th 572, 575.)

“A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness. [Citations.]” (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) “It is a fundamental rule of appellate review that a judgment is presumed correct and the appealing party must affirmatively show error. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) ‘[A] reviewing court should not disturb the exercise of a trial court’s discretion unless it appears that there has been a miscarriage of justice.’ (Id. at p. 566.)” (In re Marriage of Khera and Sameer, supra, 206 Cal.App.4th at p. 1484.)

C. Sufficiency of the Evidence

1. Previous Spousal Support Order

On appeal, Robert challenges the trial court’s statement at the hearing on his modification request that indicated, when the court previously reduced monthly spousal support to $4,500, it had found that Robert’s income was in “the $11,000 range.” Robert complains that there was no evidence at the May 10, 2016 hearing to support such a finding.

It may be reasonably inferred from the record that the court’s statement was not a new finding of fact, but merely a reference to a previous finding made by the same judge in support of its prior spousal support order. Presumably, the court was aware of its prior findings and order (see Evid. Code, § 664 [presumption that “official duty has been regularly performed”]) and impliedly taking judicial notice of them (Evid. Code, § 452, subd. (d)).[4] It is the court’s current factual findings that are reviewed for substantial evidence. Robert does not dispute that his monthly income was at one time approximately $11,000 or that the court so found when previously modifying his spousal support obligation.

2. Current Monthly Gross Income

The trial court found that Robert’s current declarations indicated a monthly gross income in excess of $7,000 based on his K Trader salary. None of Robert’s appellate arguments in fact challenge the sufficiency of the evidence to support that finding. Consequently, any sufficiency of the evidence argument as to that finding was waived. (See People v. Stanley (1995) 10 Cal.4th 764, 793.) In any case, the evidence was sufficient to support that finding since Robert himself reported “a base salary of $7,083 each month.”

3. Payment for Patricia’s Health Insurance Coverage

The court did not treat Robert’s obligation to pay for Patricia’s health insurance coverage as part of his obligation to pay spousal support, and it denied Robert’s request to eliminate the existing order requiring Robert to pay for Patricia’s health care coverage. Insofar as we can discern, Robert is arguing that there was no evidentiary basis for not granting his request to terminate that because conclusive evidence established a change of circumstances.[5] He also maintains that consideration of the circumstances set forth in section 4320 required the court to exercise its discretion by terminating that obligation.

Robert’s initial premise is incorrect. We reiterate that, “[a]lthough the trial court may not modify spousal support without proof of a change in circumstances, the converse is not true. ‘ “[A] showing of changed circumstances does not necessarily mandate a modification of spousal support.” ’ [Citation.]” (In re Marriage of Minkin (2017) 11 Cal.App.5th 939, 956; see In re Marriage of Poppe, supra, 97 Cal.App.3d at p. 10.) Similarly, a showing of changed circumstances does not dictate that spousal support must be reduced to the extent requested by the supporting party.

More importantly here, Robert has provided no legal authority showing that the trial court was required to treat his obligation to pay for Patricia’s private health insurance coverage (section 8 of the MSA) as spousal support. Robert’s spousal support obligation was set forth in an entirely different section of the MSA and not made modifiable (section 4 of the MSA). The MSA explicitly stated that Robert’s “obligation to pay for this health insurance coverage for [Patricia] shall continue until [she] obtains health insurance from Medicare” whereas the agreement specifically stated that Robert’s obligation to pay spousal support was modifiable by a court. The MSA, which was incorporated into the judgment, clearly contemplated that Robert’s obligation to pay for Patricia’s private health care coverage would be treated differently than, and separately from, spousal support.

The judgment incorporating the MSA can be reasonably interpreted as precluding a court from treating Robert’s obligation to pay for Patricia’s private health insurance coverage as spousal support and from eliminating that obligation. (Cf. In re Marriage of Hibbard (2013) 212 Cal.App.4th 1007, 1017 [“trial court correctly interpreted the MSA as setting a nonmodifiable support minimum of $2,000”]; In re Marriage of Rabkin (1986) 179 Cal.App.3d 1071, 1080-1081 [parties’ agreement incorporated into judicial order circumscribed court’s authority to reduce spousal support].) We conclude that the evidence before the court supported its refusal to treat that separate obligation as spousal support or to eliminate the obligation all together.

4. Robert’s Ability to Reduce Expenses and Increase Income

The trial court believed that Robert could reduce his expenses and that he had the ability to supplement his monthly income from K Trader based on his historic earnings. Robert asserts that “[t]he basis for the court’s imputation is elusive at best,” that the record fails to reflect that the court considered “an objectively reasonable work regime,” and that there was no evidence presented at the hearing that his historic income was $11,000 per month.

We again presume that the court was taking judicial notice of its prior findings and orders, including its prior order reducing spousal support to $4,500 based on Robert’s then monthly income of approximately $11,000. (See Evid. Code, §§ 452, subd. (d); 664.) Robert’s declaration indicates that the prior order had been filed on February 11, 2016. Robert has not demonstrated by an adequate record that the court misstated its prior finding of income.

Although Robert’s counsel asked the court at the hearing whether it was ordering Robert to work more than 40 hours per week, the court merely answered that it was finding that Robert had the ability to earn more than $7,043 per month. Nothing in the record indicates that the court was assuming an unreasonable or extreme work regime. (See In re Marriage of Simpson (1992) 4 Cal.4th 225, 234-235 [“earning capacity generally should not be based upon an extraordinary work regimen”; the supporting former spouse should not be required to maintain “an onerous work schedule”], 236 [Although “n certain occupations a normal work week necessarily will require in excess of 40 hours or occasional overtime,” “[a] regimen requiring excessive hours or continuous, substantial overtime . . . generally should be considered extraordinary. [Fn. omitted]”].)

Robert, as the moving party, had the burden to show that his earning capacity had decreased to his current monthly base salary. The parties had originally agreed, and the judgment of dissolution had incorporated the MSA providing, that Robert would pay $9,000 in monthly spousal support. The judgment’s spousal support order presumably was based on the parties’ financial situation and Robert’s ability to pay, including his earning capacity, at the time of the judgment. At the May 10, 2016 hearing on Robert’s modification request, Robert’s own counsel described him as “a man who successfully operated several businesses for a number of years.”

As indicated, Robert’s income and expense declarations stated that all his business enterprises had been “dissolved or suspended operations.” Robert previously had five businesses. In a declaration, he reported that he had dissolved Tres Picos Packing Company and Pinnacle Fruit Sales, Inc., cancelled the registration of EG Farms, LLC, suspended operations of Pinnacle Trading International, and transferred his shares in TMCM. Supporting documentation was filed. A stock purchase agreement showed that he had transferred all his shares (7,000 shares of common stock) of TMCM Management, Inc., to Katherine Beltran for a purchase price of zero dollars. A tax return showed TMCM Management, Inc. had total assets of $29,298.

According to Robert’s reply declaration, the assets of TMCM Management, Inc., had consisted of a “shareholder loan,” a loan to one of his other companies (Tres Picos Packing, Inc.), and $7,352 in cash, which had been used to pay his and Beltran’s salaries, and the company had “little to no value.” Robert explained that he had suspended operations of Pinnacle Trading International, Inc., rather than dissolving it, to preserve his license. His federal 2015 tax return for that company reflected substantial ordinary business losses.[6] Although his income and expense declarations claimed his businesses had failed, Robert offered no expert evidence in support of his modification request to explain why none of his multiple businesses could continue to operate and generate income for him, such as by working with creditors to restructure debt.

Robert’s request for modification and supporting papers reflected that he was 53 years of age and healthy, that he already had a B.S. degree, that his current tax filing status was single, and that his occupation was “produce broker.” Patricia’s declaration pointed out that Robert “actively holds a license to broker produce sales and has the ability to participate in other growing ventures . . . .”[7]

Based on the evidence and its implied judicial notice of its finding of Robert’s income at the time of its prior support order, the trial court could reasonably conclude that Robert had not presented sufficient evidence in support of his request for modification to establish that his current earning capacity was no more than his new base salary as an employee of K Trader, a job that began on April 1, 2016.

Robert reported monthly expenses of $5,537 (excluding the annual property division equalizing payment), which included among other things $1,900 for rent, $1,000 for education,[8] $417 for leasing a vehicle plus $225 for auto expenses and transportation (an annual total of $7,704), $300 for clothes (an annual total of $3,600), $250 for entertainment, gifts, and vacation, and $240 for eating out. The court could rely on its own knowledge and familiarity with the costs of living in the community. (Cf. [i]Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.) It could reasonably conclude based on the evidence that Robert’s monthly living expenses could be trimmed to some degree.

We reject Robert’s insufficiency of the evidence claims.

D. Section 4320 and the Exercise of Judicial Discretion

“ ‘A trial court considering whether to modify a spousal support order considers the same criteria set forth in Family Code section 4320 as it considered in making the initial order. [Citation.]’ (In re Marriage of West (2007) 152 Cal.App.4th 240, 247.) ‘In other words, in considering a spousal support modification request—. . . given the predicate of a change of circumstances—the trial court looks at the various factors bearing on spousal support under section 4320.’ (In re Marriage of Kacik (2009) 179 Cal.App.4th 410, 422.)” (In re Marriage of Khera and Sameer, supra, 206 Cal.App.4th at p. 1475; see In re Marriage of Stephenson, supra, 39 Cal.App.4th at pp. 77-78.)

As pointed out by Robert, the circumstances specified by section 4320 include, among others, “[t]he extent to which the earning capacity of each party is sufficient to maintain the standard of living established during the marriage” (§ 4320, subd. (a)), “[t]he ability of the supporting party to pay spousal support” (§ 4320, subd. (c)), “[t]he needs of each party based on the standard of living established during the marriage” (§ 4320, subd. (d)), and “[t]he balance of the hardships to each party” (§ 4320, subd. (k)). Insofar as Robert is suggesting that the court did not properly take into account all section 4320’s circumstances due to lack of evidence, we reject the argument. It was up to Robert as the moving party to present sufficient evidence of those circumstances insofar as relevant. (See Evid. Code, §§ 500, 550.) Where affirmative evidence of those circumstances was absent or unpersuasive, the court could properly find those circumstances were unchanged since its prior support order.

To the extent that Robert is claiming that the court failed to make express findings showing that it considered his ability to pay and all other section 4320 circumstances, we also reject that claim. His counsel prepared the findings and order after hearing. Robert has not shown that he timely requested a statement of decision detailing the court’s consideration of the enumerated circumstances set forth in section 4320. (See § 3654; cf. § 4332.) Since the order is silent on whether the court considered all the enumerated circumstances in ordering decreased support, we presume it did so. (See Evid. Code, § 664.)

Robert regards the abuse of discretion standard of review as a mere mathematical calculation, arguing that his total monthly payments to Patricia ($3,500 in spousal support plus payment of the cost of Patricia’s health insurance coverage, which her counsel represented at the hearing had been reduced to $560 , and a property division equalizing payment of approximately $2083) exceeded his monthly net pay. First, the appellate record does not contain evidence, presented to the trial court, showing that his net monthly pay was $5,200 after deductions. More importantly, his argument reflects a misunderstanding of the abuse of discretion standard.

When ruling on a request to modify spousal support, “[t]he court has discretion as to the weight it gives to each factor (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 304), and then ‘ “the ultimate decision as to amount and duration of spousal support rests within its broad discretion and will not be reversed on appeal absent an abuse of [its] discretion.” [Citation.]’ (In re Marriage of Left [(2012) 208 Cal.App.4th 1137,] 1150.)” (In re Marriage of Shimkus (2016) 244 Cal.App.4th 1262, 1273.) “t is generally accepted that the appropriate test of abuse of discretion is whether or not the trial court exceeded the bounds of reason, all of the circumstances before it being considered. [Citations.] . . . [W]hen two or more inferences can reasonably be deduced from the facts, a reviewing court lacks power to substitute its deductions for those of the trial court. [Citations.])” ([i]In re Marriage of Connolly (1979) 23 Cal.3d 590, 598.)

Section 4320 expressly requires a court to consider the supporting party’s ability to earn in assessing the supporting party’s ability to pay spousal support, one of the enumerated circumstances. Under section 4320, the court considers “[t]he ability of the supporting party to pay spousal support, taking into account the supporting party’s earning capacity, earned and unearned income, assets, and standard of living” (§ 4320, subd. (c), italics added.) Thus, under the existing Family Code, a court’s consideration of earning capacity under section 4320 is “not limited to cases in which a deliberate attempt to avoid support responsibilities is found.” (In re Marriage of Ilas (1993) 12 Cal.App.4th 1630, 1638-1639.) Robert’s reliance on earlier case law is misplaced.

Robert is not disputing that his income from various sources was significantly higher in the past or that the court found his monthly income was $11,000 when making its prior spousal support order. While the court accepted that Robert’s actual income had decreased since its February 11, 2016 order, it could find that Robert had failed to present sufficient evidence that his current earning capacity had likewise fallen.

In addition, Robert’s challenge to the court’s exercise of discretion fails to take account of his $75,000 investment in a garlic farm. In his reply declaration, Robert claimed that the investment was funded with “the proceeds of the sale of the marital residence, and not income available for support.” Notwithstanding this claim, the court was entitled to consider his separate property assets in ordering spousal support. (See § 4320, subd. (e) [“The obligations and assets, including the separate property, of each party”].) Also, Robert was not required to pay the annual property division equalizing payment on a monthly basis or from income.

“The duration of the marriage” is another relevant circumstance in ordering spousal support (§ 4320, subd. (f)). The evidence showed the parties were married for at least 27 years. Another consideration is “[t]he extent to which the earning capacity of each party is sufficient to maintain the standard of living established during the marriage, taking into account,” among other things, “[t]he extent to which the supported party’s present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage to permit the supported party to devote time to domestic duties.” (§ 4320, subd. (a)(2).) Robert acknowledges that Patricia was a stay-at-home mom for a period. Robert’s income and expense declarations indicated that Patricia was unemployed. Patricia reported that her only source of income was spousal support.[9]

Although Patricia was cohabitating with her boyfriend who had a gross monthly income of $1,500 and section 4323, subdivision (a), establishes “a rebuttable presumption, affecting the burden of proof, of decreased need for spousal support if the supported party is cohabiting with a nonmarital partner,” there was no evidence that cohabitation was a change of circumstance that had occurred after the prior spousal support order. Her reported monthly expenses exceeded the amount of her spousal support (apparently, her sole source of income) under both the prior order and the new order. Robert did not present other evidence relevant to Patricia’s need for spousal support or the balance of the hardships as to her. (See § 4320, subds. (d), (k).)

As said, “ ‘[t]he burden is on the party complaining to establish an abuse of discretion, and unless a clear case of abuse is shown and unless there has been a miscarriage of justice a reviewing court will not substitute its opinion and thereby divest the trial court of its discretionary power.’ [Citations.]” (Denham v. Superior Court, supra, 2 Cal.3d at p. 566.)

Robert has not demonstrated that the court abused its discretion by reducing monthly spousal support to $3,500 rather than $1,500 as requested.

DISPOSITION

The June 20, 2016 order is affirmed.

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