Marriage of Reed

Filed 8/9/07 Marriage of Reed CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

THIRD APPELLATE DISTRICT

(Mono)

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In a marital dissolution action, Brian R. Reed (Brian) seeks review of the trial courts order modifying spousal support payments by Roberta L. Reed (Roberta) to be paid on a step-down schedule, gradually decreasing incrementally and terminating altogether on or before April 1, 2009. We shall reverse and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

Brian and Roberta were married in 1982. They have two adult children.

Brian was, at some point during the marriage, diagnosed with schizophrenia, as a result of which he became permanently disabled and unable to work. He also suffers from work-related back and knee injuries, high blood pressure, anxiety and depression.

On October 4, 2003, after nearly 22 years of marriage, Brian and Roberta separated and filed for divorce. On that same date, a temporary restraining order issued restraining Brian from Roberta. A permanent (three-year) restraining order issued on April 15, 2004.

Entry of judgment for dissolution of marriage was granted on October 15, 2004.

On October 6, 2005, the parties entered into a stipulated agreement for division of the property and debts (the stipulated judgment) which included the following: Roberta received a home in Bridgeport, California (Bridgeport house), subject to all liens and encumbrances; designated personal property items; a 1994 Chevrolet Blazer, a 2000 Bayliner boat and trailer, a 1975 Yamaha 80 motorcycle, all subject to all liens and encumbrances; and her separate credit cards, separate checking, savings and/or credit union accounts, IRA, deferred compensation plan, public employees retirement pension plan and life insurance policy; as well as one-half of the funds and one-half of the shares from the communitys CMA account. Brian received a home in Sparks, Nevada (Sparks house), subject to all liens and encumbrances; a vacant lot in Bridgeport, California (Bridgeport lot), subject to all liens and encumbrances;^[1]designated personal property items; Snap-On tools; employment and workers compensation files; photographs and videos; a 1986 Chevrolet Sprint, subject to all liens and encumbrances; and his separate credit cards, separate checking, savings and/or credit union accounts, NuVision Financial Federal Credit Union account, IRA, CNA employees retirement plan and life insurance policy; one-half of the funds and one-half of the shares from the communitys CMA account; and any and all proceeds arising out of his pending workers compensation claim.

The parties also stipulated that Roberta would pay Brian temporary spousal support in the amount of $937.09 per month to cover the mortgage and homeowners association fees on the Sparks house. Brian agreed to submit to a vocational evaluation within 60 days of entry of judgment to determine his employment capabilities, after which the parties would make good faith efforts to resolve the issue of permanent spousal support. The court reserved jurisdiction over the amount and duration of spousal support.

In December 2005, Roberta requested that the court modify the temporary support order by imposing a step-down payment schedule such that Brian would continue to receive $937.09 per month until April 1, 2006, after which that monthly amount would decrease incrementally until support payments terminated altogether on the sooner of [Brians] self-sufficiency, remarriage, cohabitation, death of either party or April 1, 2009, whichever occurs first. Roberta based her motion on various factors set forth in Family Code section 4320, including the goal that Brian be self-supporting within a reasonable period of time ( 4320, subd. (l)),^[2]consideration of monies spent by Roberta on educational support for her adult son ( 4320, subd. (n)), and a history of domestic violence by Brian ( 4320, subd. (i)). Brian opposed the motion, arguing, among other things, that Robertas income was sufficient to continue support as ordered, that he was unable to supplement all or any portion of those payments due to his permanent disability, that there was no documented evidence of domestic violence, and that a step-down payment schedule was improper given the length of the parties marriage (nearly 22 years).

The trial court granted Robertas motion, ordering the requested step-down payment schedule and terminating spousal support altogether on or before April 1, 2009.

Brian filed a timely notice of appeal.

DISCUSSION

I

Brian contends the trial court erred in modifying the spousal support order to impose step-down payments, and abused its discretion by terminating spousal support altogether in 2009.

The trial court has broad discretion to decide whether to modify a spousal support order based on a material change of circumstances. In exercising this discretion, the court considers the same criteria set forth in section 4320 as it considered when making the initial order and any subsequent modification order. [Citation.] These factors include the ability of the supporting party to pay; the needs of each party based on the standard of living established during the marriage; the obligations and assets of each party; and the balance of hardships to each party. [Citation.] (In re Marriage of Terry (2000) 80 Cal.App.4th 921, 928 (Terry).)

Orders regarding the modification of an existing spousal support order under section 4320 are reviewed for an abuse of discretion. (In re Marriage of Bower (2002) 96 Cal.App.4th 893, 898-899.)

As a preliminary matter, we note that there was very little evidence submitted by either party with respect to the motion to modify spousal support. The pleadings filed by Roberta in support of the motion contain a significant amount of factual argument; however, the motion is not supported by any declarations or other documentary evidence other than her income and expense declaration filed on the same date as the motion. Brians opposition similarly argues the facts but is supported only by his income and expense declaration filed subsequent to the opposition, and his declaration, also filed subsequent to the opposition, which responds specifically to many of the factual arguments set forth in Robertas moving papers. Brian also filed a request for leave to introduce oral testimony at the hearing; however, no testimony was ever elicited.

It appears, from the reporters transcript of the hearing, that the parties had a tacit understanding (if not an express agreement not made a part of this record) that the moving and opposition papers and the arguments contained therein would suffice as evidence for purposes of the motion to modify spousal support. At the inception of the hearing, the court stated: I understand that the parties are prepared to submit it on the evidence and arguments in the pleadings and some oral argument to be made at this time. The parties proceeded in a manner consistent with that understanding, as did the court. Indeed, when Robertas counsel offered to put [Roberta] on the stand or make an offer of proof that her living circumstances are certainly reduced now due to the payments on many things that she has deferred, the court responded, Why dont you argue. I thought that we started this by saying this is only going to be argument, that there would be no evidence.

While the parties and the court apparently treated oral and written argument as evidence at the hearing on the motion, in the absence of an express stipulation that the facts are undisputed, we cannot do the same. Consequently, in order to determine whether the court abused its discretion in modifying spousal support, we must ascertain what portion, if any, of the courts order is supported by evidence contained in the record.

The trial courts Statement of Decision and Order After Hearing Re: Spousal Support (statement of decision) addresses each of the 14 factors laid out in section 4320. Contrary to Brians assertion that the court blithely dismissed the issue regarding his earning capacity, the statement of decision twice recognizes that Brian is functionally unemployable, a fact that was conceded by Roberta at the hearing. The court nonetheless concluded that Robertas earning capacity alone is not sufficient to maintain the standard of living established during marriage because that standard was artificially inflated due to significant personal injury settlement proceeds contributed during the marriage, as well as Robertas expenditure of extraordinary time and energy to her employment so as to maximize the familys income, and her own since separation, at great personal cost to her.

With respect to Robertas earning capacity, the only evidence in the record is Robertas income and expense declaration which shows gross monthly income (i.e., salary plus bonuses) of approximately $5,706 and estimated monthly expenses of $5,887, monthly investment income of $125, and assets in the form of cash, checking and savings accounts, deposit accounts, stocks, bonds and other saleable assets and real property totaling approximately $292,732. Brian disputed only the fact that Robertas monthly expenses include the cost of putting their child through college, indicating in his declaration his belief that Roberta contributed to an account through Merrill Lynch throughout the marriage which has sufficient funds to pay for [the childs] expenses.^[3]

As for the marital standard of living, Roberta argued the lifestyle of the parties during marriage was artificially inflated due to the utilization of litigation settlement proceeds which allowed them to live at a higher level than the income produced by her and augmented by Brians disability payments. She detailed the specific manner in which the parties utilized the settlement proceeds, explaining that the money was infused into the community to supplement the parties income, purchase, landscape and furnish the Sparks house, purchase the family boat, and purchase vehicles for the children, and was deposited into retirement accounts for tax purposes.

Brian initially argued that it was Robertas income alone that paid for the parties needs during the marriage and allowed the parties to contribute to savings and retirement accounts, pay for medical and life insurance, pay the mortgages on two homes and purchase the Bridgeport lot and various vehicles. However, he conceded at trial that significant portions of [the settlement] proceeds were used to supplement [the parties] income.

While it does not appear that the amount of the personal injury settlement is in dispute, the parties are at odds as to what part, if any, those settlement proceeds played in the pre-divorce standard of living. Notwithstanding significant written and oral argument on that issue, however, neither party submitted a single piece of evidence, documentary or otherwise, regarding the manner in which the proceeds were utilized.

As for the issue of income and ability to pay support, Roberta argued she worked long hours each week to earn additional performance pay over and above her base salary. She further argued her income was impacted by the cost of her adult sons tuition, books, lodging, medical, auto and other bills as necessary, and costs associated with a 14 year-old house suffering from years of deferred maintenance and appliances in need of repair or replacement.

Brian argued that, because Roberta earns equal to or more than what she made during the marriage, and because he has no earning capacity due to his permanent disability, Robertas earning capacity is sufficient to maintain the standard of living he enjoyed during the marriage.

Again, there was little evidence offered to support either partys argument. Robertas income and expense declaration reveals only that her current expenses exceed her current income, and that she has assets valued at approximately $290,000. That document also shows that $1,152 of Robertas monthly expenses are attributable to costs associated with putting the parties son through college. Brians declaration in opposition to the motion disputes that fact based on his belief that those costs are paid from an account which was previously funded for that purpose rather than from current income. Brians income and expense declaration provides no help on that point.

Other than the parties income and expense declarations, and Brians declaration in opposition to the motion (which we note has no supporting documentation of its own relevant to the issues at hand), the only other piece of documentary evidence contained in the record is the stipulated judgment. However, without information regarding the value of each item disposed of therein, particularly the real properties, automobiles and deposit and retirement accounts, and in the absence of any information regarding application of the personal injury settlement proceeds, that document does little to assist us in determining whether there is support for the trial courts findings.

The evidence is only slightly less lacking with respect to Brians current standard of living and his ability to be self-supporting presently. In determining the needs of each party based on the standard of living established during the marriage ( 4320, subd. (d)), the court found that Brian had been enjoying a standard of living well above that of the parties during marriage, well beyond his needs. There is some documentary evidence in Brians income and expense declaration to support that conclusion, namely, that he is spending approximately $550 per month on clothing despite the fact that he is unemployable and approximately $250 per month on a new car. As for his ability to support himself presently, Brian receives, and will continue to receive, monthly social security disability benefits of at least $1,461.50. Additionally, the stipulated judgment lists the items of real and personal property Brian received, including the Sparks house, the Bridgeport lot, numerous tools and other personal property items, a Chevrolet Sprint, mortgage fund shares, his IRA and CNA Employees Retirement Plan, funds from various accounts, his life insurance policy, all rights to his workers compensation claim and $5,000 in attorney fees. However, other than his counsels apparent concession that the division of property between the two parties was a million dollar settlement, the record is devoid of any evidence as to the actual value of property distributed to either party. For instance, Brian argues the vacant lot is the only asset that a reasonable person might restructure and, without citation to the record, places its value at $71,000. According to the stipulated judgment, Brian was awarded the lot free of any liens or encumbrances and, from what we can glean from the record, the parties seem to agree that the equity in the lot at the time of disposition was $71,000. The record, however, is silent as to the actual market value of that property and, although Brian never disputed Robertas assertion that similar lakefront lots in the area had recently sold for over $200,000, neither party offered any evidence or expert testimony regarding that issue.

While we recognize that proceedings in family law court often take a less formalized approach, in the absence of evidence submitted by way of documents, oral testimony or stipulation, argument alone will not suffice as evidentiary support for modification or termination of spousal support. It is clear Brian received items of value in the stipulated property division; however, without credible evidence, we cannot determine whether the courts conclusion that Brians separate assets are such that he has income potential which is reasonably capable of augmenting his income and could easily afford him a level of living comparable to that which the marriage provided has support in the record.

The trial courts findings also include a determination under section 4320, subdivision (i) that there was documented evidence that [Brian] had perpetrated domestic violence on [Roberta].^[4] Brians appeal neither discusses nor objects to that finding. Instead, he objects to Robertas request that we take judicial notice of various documents in two cases, Reed v. Reed, Mono County Superior Court case No. 15022, and People v. Reed, Mono County Superior Court case No. BMI061428, arguing the requests are procedurally inappropriate and the application of the requested documentation under section 4325, subdivision (a) irrelevant in determining Brians support.^[5]

We note that, at the spousal support hearing on February 24, 2006, case No. 15022 was not before the court, nor did either party request judicial notice of all or any portion of that file for purposes of these dissolution proceedings. However, that file contains, as does Robertas request for judicial notice, a permanent (three-year) restraining order dated April 15, 2004, issued by Judge David DeVore (the same judge presiding over the spousal support hearing), restraining Brian from Roberta based on his threatening words and conduct towards her. Given Judge DeVores familiarity with the April 15, 2004, restraining order in case No. 15022, he undoubtedly had that case in mind when he considered whether there was a history of domestic violence between the parties for purposes of modification of spousal support. For that reason, pursuant to Evidence Code sections 452, subdivision (d), and 459, we grant Robertas request for judicial notice as to case No. 15022.^[6] In so doing, we conclude the courts inclusion of documented evidence of domestic violence perpetrated by Brian against Roberta for purposes of modifying spousal support under section 4320 was appropriate. However, because that evidence did not amount to a criminal conviction (at least not as of the time of the hearing), that evidence cannot be the sole basis for denial of spousal support under section 4325.

In any event, the evidence before the court at the hearing was limited to the parties income and expense declarations and the stipulated judgment. Because the trial court and the parties proceeded (without objection) in a manner that suggests there was an agreement that written and oral argument would suffice in lieu of evidence submitted through properly founded documents and oral testimony, we cannot determine whether the trial courts decision to modify spousal support was an abuse of discretion without an express stipulation to the facts, or credible evidence in support of the arguments. We therefore remand the matter back to the trial court for further proceedings to allow the parties to present oral and/or documentary evidence regarding the proposed modification in spousal support.

II

Brian also contends that the courts termination of

support by April 1, 2009, was an abuse of discretion due to the long-term nature of the marriage and his permanent disability.

Section 4322 provides for termination of support where the supported party has or acquires a separate estate, including income from employment, sufficient for the partys proper support. Under section 4322, [t]he trial courts job is to ascertain whether the estate reasonably could generate sufficient income for proper support, not to second-guess how the spouse will manage that estate to ensure sufficient income. Thus a decision that an estate is adequate or sufficient is not a decision that any particular investment strategy must change, although that may happen. (Terry, supra, 80 Cal.App.4th at p. 932.)

An order terminating support under section 4322 addresses a mixed question of fact and law calling for (1) a resolution of the historical facts regarding the supported spouses estate and needs, and (2) a legal determination regarding whether this estate is sufficient for proper support. Where the facts are in dispute, the former is reviewed under the substantial evidence test. The latter determination is reviewed de novo. (Terry, supra, 80 Cal.App.4th at pp. 928-929; cf. Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888.)

It is undisputed that Brian is permanently disabled and receives monthly disability benefits in the amount of $1,461.50. The Sparks house in which he lives requires a monthly mortgage payment and homeowners association dues in the amount of $937.09; however, other costs associated with that property cannot be determined without further evidence. The Bridgeport lot is paid for and has $71,000 in equity; however, the market value is unknown but may be in excess of $200,000, and, although we presume the lot has the ability to generate income, whether through sale, exchange, rental, development or by other means, we cannot determine the extent to which Brian can utilize that property to support himself without credible evidence as to its value and potential use. Of course, the law does not require Brian to sell or otherwise dispose of the land; but, it will take into consideration the propriety of his decision not to manage it in a manner that will generate reasonable income for him. [T]he ultimate section 4322 determination is whether a particular estate is, or is not, reasonably capable of providing for a spouses proper support. That determination will vary with the nature of the particular estate. (Terry, supra, 80 Cal.App.4th at p. 930, emphasis added.) Where a supporting spouse raises an issue as to the supported spouses management of property, the court should look to the estate as a whole, including the actual and reasonable income potential from investment assets, as well as their total value, in resolving the issue of the estates sufficiency for proper support. (Ibid.) [J]ust as lack of diligence in seeking employment may lead to a refusal to award spousal support (In re Marriage of Sheridan (1983) 140 Cal.App.3d 742, 749), so too may improvident management of assets, which were sufficient to provide self-sufficiency in the accustomed lifestyle, justify termination of support and jurisdiction even though such an order may result in an alteration in the supported spouses lifestyle. (In re Marriage of McElwee (1988) 197 Cal.App.3d 902, 909-910.) Without credible evidence from both parties, we cannot determine whether the trial courts determination as to any of those factors was provident. As such, further evidentiary proceedings are necessary to determine whether Brians separate estate, including his social security income and assets he acquired in the stipulated division of property, is sufficient for his proper support.

DISPOSITION

The judgment is reversed and the matter remanded to the trial court for further proceedings as directed in this opinion. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.276(a)(4).)

NICHOLSON , J.

We concur:

SIMS , Acting P.J.

MORRISON , J.

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^[1] According to documents filed by Roberta, the loan on the Bridgeport lot was paid in full.

^[2] Further undesignated section references are to the Family Code.

^[3] Brian offered no testimony or documentary evidence in support of that assertion.

^[4] Section 4320 takes into consideration whether or not there is [d]ocumented evidence of any history of domestic violence between the parties, including consideration of any history of violence against the supporting party by the supported party. ( 4320, subd. (i).)

^[5] Section 4325, subdivision (a) provides that, [i]n any proceeding for dissolution of marriage where there is a criminal conviction for an act of domestic violence perpetrated by one spouse against the other spouse entered by the court within five years prior to the filing of the dissolution proceeding, or at any time thereafter, there shall be a rebuttable presumption affecting the burden of proof that any award of temporary or permanent spousal support to the abusive spouse otherwise awardable pursuant to the standards of this part should not be made.

^[6] We cannot say the same, however, for case No. BMI061428, which occurred after the February 24, 2006 spousal support modification hearing and was not before the trial court when it rendered its statement of decision. We therefore deny Robertas request for judicial notice as to case No. BMI061428.