Marriage of Noakes and Ketterman

Filed 2/23/07 Marriage of Noakes and Ketterman CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

Steven Ketterman and Diane Noakes married in 1984, had three children at their separation in 2000, and dissolved their marriage under a marital settlement agreement (MSA) incorporated into a judgment of February 2002. This appeal by Ketterman is from an order of January 14, 2005, following trial on each partys order to show cause (OSC). The order resolved many issues, and Ketterman challenges only certain parts determining his income for support and fees purposes, and determining child support arrearages and reimbursable medical expenses. He claims that support arrearages were not properly before the court, that various factual determinations about his income lack substantial-evidence support, that a hearsay report was erroneously and prejudicially considered, and that medical expenses were not reimbursable under the terms of the MSA.

We reverse in one particular and otherwise affirm.

Background

In their OSCs, Noakes sought intentionally undisclosed assets consisting of a life insurance policy and individual retirement account (IRA), reimbursement of medical expenses with treble damages as allowed by the MSA, declaratory relief regarding future medical expenses, attorney fees, and costs; Ketterman sought a downward and retroactive modification of child support, given that one child had turned 18, plus costs and attorney fees.

In the parts contested by Ketterman, the court ordered him to reimburse $5,202.69 in medical expenses ($500 monthly but without treble damages); made findings regarding both parties incomes; granted Ketterman a reduction in child support from $1,789 to $1,558, but effective as of the time of his request rather than earlier, as he had sought; ordered him to pay $13,696 in support arrearages ($500 monthly), rejecting his claim that he was justified in unilaterally reducing and ultimately ceasing altogether his prior support obligation; and ordered him to pay $10,000 in fees and costs ($250 monthly), partly as a sanction for terminating that support and not reimbursing past medical expenses.

The appellate record, as of the time this case was orally argued, contained an appendix with the filings on Kettermans motion for reconsideration (which had sought correction of asserted errors but been denied for lack of new facts or law), a reporters transcript of the hearing on that motion, and no reporters transcript of the underlying trial that had taken place on January 7, 2005. Lack of the trial transcript made it impossible to fully assess either partys arguments, but we granted Ketterman leave to belatedly file the missing transcript and now, with the parties having waived further argument, reach the merits of their arguments.

Discussion

A party challenging a judgment has the burden of showing reversible error by an adequate record, and if this is not done, the appellate court has no occasion to consider further the merits of the appeal. (Ballard v. Uribe (1986) 41 Cal.3d 564, 574-575.) An order, like a judgment, is presumed correct and thus entails the same burden. (Hernandez v. CaliforniaHospitalMedicalCenter (2000) 78 Cal.App.4th 498, 502.) The appellant must in every case affirmatively show error and show further that the error is prejudicial. (Vaughn v. Jonas (1948) 31 Cal.2d 586, 601.)

In assessing attacks on the sufficiency of the evidence,   a reviewing court must presume that the record contains evidence to support every finding of fact, and an appellant who contends that some particular finding is not supported is required to set forth in his brief a summary of the material evidence upon that issue. Unless this is done, the error assigned is deemed to be waived. [Citation.] It is incumbent upon appellants to state fully, with transcript references, the evidence which is claimed to be insufficient to support the findings. [Citations.] (In re Marriage of Fink (1979) 25 Cal.3d 877, 887.) If an appellant sets forth his or her own evidence, without all material evidence on point, the claimed error is deemed waived. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881; In re Marriage of Fink, at pp. 887-888.)

Where we lack formal findings in a statement of decision, all intendments favor the ruling, and we assume that the court made whatever findings are necessary, whether stated or not, to sustain the ruling. (Michael U. v. Jamie B. (1985) 39 Cal.3d 787, 792-793.)

We now take up each of the challenges Ketterman mounts, discussing the pertinent evidence in each discussion section.

I. Income Determinations

Ketterman challenges some aspects of the income calculations upon which the court based its fees and child support determinations. These were drawn from exhibits and testimony by both parties about income Ketterman derived from a sole proprietorship known as Steves Ultimate Auto Body. Ketterman disputes, in particular, (1) the court crediting as income a $20,000 deposit that he testified was a cashiers check received as a loan, (2) the court crediting as income $7,579 that he testified were refund credits on a charge account reflecting identity theft and surcharge rebates, and (3) the resulting error in calculating deductions, from gross receipts, of percentages representing expenses deemed the cost of goods sold. Noakes responds that these claims are waived by Kettermans failure to cite all of the material trial evidence, meritless and bound up in credibility issues that the court resolved against him, and speculative since the absence of a formal statement of decision leaves it unclear whether the court in fact made the determinations that Ketterman decries.

The written decision does not specifically address the asserted loan and refund credits. Assuming, nevertheless, that the court did implicitly credit those items, we find those determinations supported by substantial evidence.

Comments by the court upon the reconsideration motion strongly suggest that Ketterman failed to adequately or credibly prove that the items were not regular business income, and the trial record supports that view. A problem for the court in making its calculations was that Ketterman ran his business on a Mechanics Bank checking account that, he testified without conflict, was his only such account and was regularly used for both business and personal matters. It was stipulated that the account entries he presented as proof were accurate, but the entries did not resolve the threshold question, for many of them, whether these were business or personal items. The $20,000 deposit into the account on June 18, 2004, was one such item. When asked about it, Ketterman testified: It was a cashiers check from my grandmother on a 20,000 dollar loan that I borrowed; and its a 20,000 dollar loan from my grandmother, if youd like to know what it is. It was not a cash deposit, he said, but a loan from Violet L. Young: If you look at it, he went on, it says that its 20,000 dollars, pay to the order of Violet Young. If you look below it, she endorsed it on the bottom. It was deposited into my business account. As I told you, it was a 20,000 dollar loan from my grandmother. Ketterman presented no corroborating documentation or declaration from Young, and his counsel did not ask Noakes if she recognized the name Violet Young as being Kettermans grandmother.

There was also starkly conflicting testimony as to whether Ketterman did business in cash. He testified at one point, I do not routinely deposit cash into my account, no, and denied as well that he routinely receive[d] payment from people in cash. Noakes, however, later testified that Ketterman did sometimes receive business payments in cash. She also testified that she [a]bsolutely believed that Ketterman had income of about $10,000 to $12,000 a month, rather than the lesser amount he was claiming, and she related that their yearly spending during marriage had consistently been around $100,000. The court commented in its order that Kettermans testimony was vague and evasive, and the court could reasonably question this undocumented loan from a grandmother, when Ketterman testified elsewhere, to explain credit card charges to various online pharmacies, that he helped his grandmother (and mother) by buying them hundreds of dollars worth of medications. We cannot say that the court abused its discretion or lacked evidence to find that the $20,000 was not, in fact, a loan. It was Kettermans burden in seeking a reduction in child support to prove changed circumstances (In re Marriage of Leonard (2004) 119 Cal.App.4th 546, 556), and his extraordinarily casual approach to that task regarding the commingled funds in his all-purpose bank account evidently, and understandably, did not inspire confidence.

Similar reasoning upholds any implicit treatment, as business income, of the items Ketterman claimed were credits or surcharges for unauthorized transactions flowing from identity theft. In fact, Kettermans testimony about those thefts was mingled with his testimony about buying the drugs online for his mother and grandmother. He testified that he thought some of the online pharmacy purchases might have been fraudulently charged. Then, when asked to clarify when the identity theft occurred, he tried to shift his burden, saying: I dont know the exact dates. I have the information at work. You can notify Mechanics Bank and contact them. Its all in the records.

Ketterman fails to show error.

II. Hearsay Report

Ketterman claims that the court erroneously considered, also for income purposes, a 2001 preliminary report by certified public accountant Don Glenn, prepared at the time of the parties dissolution, that estimated his yearly income at about $83,000. He claims that he successfully objected at trial, on hearsay grounds, yet observes that the courts order states that one of the many exhibits the court reviewed was the letter report by Don Glenn dated June 21, 2001 . . . . That the court arrived at a yearly income figure of $88,277, Ketterman urges, shows prejudice. We find neither error nor prejudice.

First, we are not convinced that the court excluded the letter from evidence, and thus that later considering it was error. The objection to which Ketterman refers came near the close of trial, during Noakess testimony. Noakess attorney had just elicited that the parties and their counsel had hired Glenn to prepare a preliminary report on Mr. Kettermans income, and when counsel showed Noakes a copy of the letter, opposing counsel interjected, Your Honor, Im going to object on relevancy grounds and res judicata. That report and everything thats in it is, whereupon the court asked to first hear the question. Counsel for Noakes asked, Do you recall Mr. Glenn reporting that Mr. Kettermans income for that year was 83,300 dollars? It was then that Kettermans counsel objected on hearsay grounds, and the court sustained the objection as Noakes replied, Its in the report, yes. It does not appear that the objection and ruling were aimed at the letter itself, only to Noakes reciting what the letter said.

Second, if the court did mean to exclude the letter, the effort was ineffectual, for Noakess examination immediately resumed as follows, without objection: [Q.] Do you have any personal knowledge as to what Mr. Kettermans income was during the period this report was prepared? [] A. Much higher than 83,000. Our spending was around a hundred thousand that year. [] Q. Okay. And did you consistently spend, during marriage, about a hundred thousand a year? [] A. Yes. There was no motion or ruling to strike her reference to the $83,000, and the income estimate and its genesis therefore remained in evidence regardless. Any erroneous consideration of the letter itself was redundant and harmless.

A further redundancy is that Ketterman himself had testified earlier in the trial about the same letter. He and his former counsel, he said, stipulated to the appointment of Glenn to value the business and to prepare a report indicating value and income for support purposes. Ketterman estimated that a later final report attributed around 70,000 dollars of income to him. His counsel then did object, not based on hearsay, but based on the matter being res judicata. The court said: I dont know if its res judicata or already tried. We can just get to the bottom line by looking at the DissoMaster which is what the Court then used. Thats correct, Kettermans counsel agreed, and counsel for Noakes added that the parties ultimately used a monthly figure of $6,500, or $83,000 a year, which was exactly what Mr. Glenn said in his report. The court then reasoned: [T]hat would be in the DissoMaster and wouldnt need any testimony from him. Its a matter I could take judicial notice of. The court presumably did so, and none of Kettermans or Noakess testimony about the letter was stricken. Accordingly, the claims of error and prejudice are groundless.

Of course, we also reject Kettermans claim that prejudice must be presumed, which is contrary to any pertinent authority, notably the express provisions of Code of Civil Procedure section 475, which require that prejudice appear from the record and specifies, [t]here shall be no presumption that error is prejudicial, or that injury was done if error is shown.

III. Arrearages Issues

Ketterman next contends that the court, in fixing child support arrearages, ruled on something not before the court and erred further by failing to exercise its discretion under In re Marriage of Trainotti (1989) 212 Cal.App.3d 1072 (Trainotti), to credit or offset amounts he may have spent while Kirsten lived with him. Noakes urges that the theory-of-trial doctrine bars objecting to matters outside the pleadings (citing Hilliard v. A.H. Robins Co. (1948) 148 Cal.App.3d 374, 392-393) because the court reached arrearages without objection and on testimony from Kettermans own mouth about his past nonpayments. She also claims waiver since Ketterman never asked the court to exercise discretion under Trainotti. Ketterman rejoins that his testimony on past nonpayments related to Noakess request for sanctions and that he had inadequate warning of arrearages to raise the Trainotti issue.

We reject the threshold assumption that arrearages were not placed in issue. It is true that neither partys OSC expressly raised arrearages, but they were implicitly raised by Kettermans OSC request that the court not only reduce his support obligation but also make the reduction retroactive to either a date in 2002, when the original judgment had indicated there was to be a review of the support (that ultimately never occurred), or to September 2003, when their eldest child, Jennifer, had reached age 18. We appreciate that this request may have been designed in part to lessen sanctions by mitigating the disrespect Ketterman had shown the court by unilaterally reducing and then stopping his ordered child support. Clearly, however, retroactive reduction was also sought to offset arrearages the court would address when looking to lower the support level. Kettermans own counsel evidently anticipated this at trial when he reminded the court that it had all the issues of retroactivity before it, and closed by saying: So the major issue that this Court needs to resolve is how much money one party owes the other, and that cant be determined until the Court actually rules on the support and the other issues. Thank you, Your Honor. Counsel also expressed no surprise when opposing counsel stressed to the court that Ketterman had conceded nonpayment of support and currently owed her client $13,000.

Accordingly, we reject the arguments that arrearages were not properly before the court. Ketterman tries to argue that surprise at the inclusion of support arrearages denied him a due process chance to contest the award, yet the basic facts were in evidence and undisputed. It was conceded that the last support order had set monthly support at $1,789, that Ketterman reduced his payments to $1,000 for several months beginning in March 2004, then made two last payments of $500 in August and September of that year, and then paid nothing further. His payments were in evidence, and the court credited his 2004 payments. He also pursued his various retroactivity arguments vigorously, if not successfully, and raises no arguments against the courts resolution of those issues.

Ketterman urges that he was deprived of a fair opportunity to raise a Trainotti offset issue, but it appears from the record that trial counsel, while for reasons unknown not pressing the credit/offset issue fully until the reconsideration motion, had nevertheless anticipated it during trial. He attacked in some detail Noakess testimony as to how long and when Kristen had stayed with each of the parties during the past year. Counsels failure to press the issue more pointedly and timely must be deemed a waiver, and Ketterman raises no separate issues regarding the courts handling of the reconsideration motion.

IV. Medical Reimbursement

More convincing is Kettermans challenge to the medical reimbursement award. Paragraph 10.3 of the parties MSA required that each parent bear half the cost of any uninsured medical, dental, vision or counseling costs for the children, but specified: Any non-emergency, uninsured cost must be agreed to by both parties, in writing, in advance before the other party is responsible for any part of the expense. If a written agreement is not obtained ahead of time for the non-emergency, uninsured cost, then the party incurring the cost shall be solely liable for the cost. Any party who advances the whole cost of an uninsured cost as described herein shall be reimbursed within 30 days of making a written demand, or the nonpaying party will owe treble the amount. This provision is now effectively altered, by the January 14, 2005 order, which, at Noakess urging, substituted language that shifts the duty of paying and seeking reimbursement to Ketterman.^[1]For purposes of the reimbursement award before us, however, the MSA language controls.

Ketterman claims lack of substantial evidence to show that the ordered expenses were (1) agreed to beforehand in writing, (2) incurred for emergencies, or (3) supported in the amount ordered. Noakes questions, on policy grounds, the enforceability of the MSA language but, in any event, claims that Ketterman waived the provision at trial both by not asserting it and by testifying that all he required was proof of payment by [Noakes], and that he had in fact paid some of the expenses (meaning in that manner, evidently).

We find no failure to assert the provision. Ketterman clearly invoked the MSAs advance-approval provision in testimony. Early on, he pointed out: [i]f you read the MSA, it says in there that I get to approve of the doctors that they go to . . . . Im not sure how its worded but all nonemergency appointments need to be approved by both parents, or the parent that takes them is responsible. Later in his testimony, he reiterated, referring to some unpaid expenses: These were done without my consent or knowledge, and the MSA stipulates [] . . . [] The MSA says that if its nonemergency doctors, or whoever, I have a choice, and a say. She cannot take them somewhere nonemergency and sign them up and expect me to pay half the bill without my knowledge. And I find out six months later that my children are seeing a psychiatrist that I had no idea about. Elsewhere in his testimony, he also invoked the further requirement of proof of payment, and Noakes invoked the paragraph herself, by number, to stress its treble damages language and that she was seeking such damages for nonpayment. Thus, there is no waiver by failure to raise the provision below.

Nor can we agree that Ketterman waived the provision by, in Noakess words, testifying that all he required was proof of payment . . . and that he had in fact paid some of the expenses. Ketterman never said that proof of payment was all he required. He did allude in testimony to having made reimbursement once he got proof of payment, but the subject of advance approval was not implicit in that questioning, as he was not asked whether he had insisted on, or foregone, prior approval. Noakes also incorrectly claims that Ketterman expressly waived the advance-approval issue. She cites [n]ever or no answers in her own testimony to questions by her counsel whether Ketterman had ever contacted her to dispute specified expenses she claimed to have mailed to him. We do, of course, infer in support of the order that the court credited her testimony; however, it sheds no light on whether Ketterman led Noakes to believe he was waiving the advance-approval requirement. Noakes was speaking of bills she sent him in February, June or July, and November or December of 2003, plus two that she had sent after filing her OSC. Kettermans position, going into the trial, was that he had not received any requests before the OSC. We infer that the court ultimately believed Noakes did send pre-OSC requests, but Noakes does not identify any evidence that Ketterman actually paid any of them so as to give her reason to believe that he was waiving the advance-approval provision. The trial court awarded Noakes a total of $5,202.69, in pre- and post-OSC expenses, without treble damages, and Noakes does not show in her briefing how much, if anything, Ketterman had paid in response to her pre-OSC requests. Indeed, we gather from her testimony about his lack of objection to the 2003 submissions that none of them were paid. If none were paid, and Noakes does not show otherwise, we cannot reasonably infer that Ketterman led her to believe he was waiving the advance-approval condition.

We reject Noakess suggestion that enforcing the advance-approval provision is barred by public policy. We cannot imply a favorable finding here, for Noakes never raised this issue below. Taking it as a purely legal issue arguably reviewable for the first time on appeal, Noakess only case authority is inapt (Parscal v. Parscal (1983) 148 Cal.App.3d 1098, 1102-1103 [spendthrift trust provision not enforced to defeat duty of child support]), and she cites no authority that a parental agreement of this sort may not be validly enforced as part of a court judgment. Generally, custody orders may specify items for which the consent of both parents is needed, as well as the consequences of failing to obtain consent. (Fam. Code,  3083.) Shared uninsured costs for reasonable medical care, with required proof of payment and a 30-day reimbursement schedule, are common items of additional child support. (Id.,  4063, subds. (b)(1)-(4).) Disputes may arise over whether a particular cost is reasonable (id.,  4062, subd. (a)(2)) and require court resolution (id.,  4063, subd. (b)(4)), and Ketterman notes that requiring advance approval could help reduce disputes and legal costs. Noakes does not show, as a matter of law, that the provision was unenforceable on public policy grounds.

Finally, Noakes cites no evidence that any of the reimbursed expenses were for emergency care and thus exempt from the provision.

Disposition

We strike that part of the order of January 14, 2005 directing Ketterman to reimburse $5,202.69 in uninsured medical costs. The order is otherwise affirmed.

_________________________

Kline, P.J.

We concur:

_________________________

Haerle, J.

_________________________

Lambden, J.

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^[1] Part 4 of the order provides: [Noakes]s request that [Ketterman] be responsible for advancing all payments for medical expenses for the minor children is granted. Whatever problems occurred in the past, it is not the way to go forward. In the future [Ketterman] will be liable for the expenses and [Ketterman] is to seek reimbursement of such expenses from [Noakes]. [Noakes] shall be ordered to reimburse [Ketterman], within 30 days of receipt, one-half of all medical, dental, orthodontic, vision, therapy and/or child care expenses incurred on behalf of the minor children and presented with proof of payment by [Ketterman]. In the event that [Noakes] fails to reimburse [Ketterman] within 30 days of presentation of paid expenses, she shall be liable for treble damages pursuant to the terms of the parties Judgment.