Marriage of Frost and Neuendorf

Filed 4/5/06 Marriage of Frost and Neuendorf CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from an order of the Superior Court of San Diego County, J. Edgar T. Rutter II, Judge. (Retired judge of the Orange Sup. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.). Affirmed in part; reversed in part.

Daniel Neuendorf challenges an order imputing income to him for purposes of calculating his child support obligation to Tracy Rogers, and awarding attorney fees to Rogers. We reject his challenges except for a portion of the attorney fee award.

OVERVIEW

Neuendorf and Rogers were married in 1984 and had two children, born in 1987 and 1989. They separated in April 2001, and their marriage was dissolved by judgment in December 2001. Rogers has primary custody of the children, and Neuendorf has a 37.7 percent time share. Neuendorf, whose annual salary was over $99,000, was initially ordered to pay a total of $1,400 monthly child support for the two children.

In November 2003, Neuendorf was laid off from his job. In December 2003, he filed a motion to modify child support. The parties settled the matter by stipulating that Neuendorf's child support obligation would be a total of $500 per month for the two children.

In June 2004, Neuendorf, still unemployed, stopped making his child support payments. On September 29, 2004, he filed a motion to modify child support based on his continued unemployment. This motion is the subject of this appeal. Rogers responded by requesting that the court order a vocational evaluation of Neuendorf. She also filed companion motions to determine child support arrearages and medical expenses reimbursement.

At a hearing on January 20, 2005, the court ordered Neuendorf to pay $2,000 child support arrearages (for the months of June through September 2004) and to pay his one-half share of the children's medical expenses. Further, commencing October 1, 2004, the court imputed $65,000 annual income to Neuendorf and ordered that he pay guideline child support of a total of $347 per month for the two children.

The court awarded Rogers $4,500 in attorney fees and costs for Neuendorf's support modification motion and Rogers's companion motions, and $1,000 in attorney fees for her response to Neuendorf's posthearing motion to set aside or reconsider the court's order, finding that Rogers had a need for payment and Neuendorf had the ability to pay. Additionally, the court awarded Rogers $1,000 in attorney fees as sanctions for Neuendorf's failure to disclose a pension asset prior to the earlier judgment dividing the community property.

Neuendorf, although represented by counsel, was not personally present at the January 2005 hearing where the court rendered its rulings. After the court's rulings, Neuendorf filed an unsuccessful motion to set aside or reconsider the order based on his absence.

On appeal, Neuendorf argues the court's decision to impute $65,000 annual income to him is not supported by the evidence, and the court erred in ordering him to pay $5,500 in attorney fees and costs based on the parties' respective needs and abilities and $1,000 in attorney fees as a sanction for nondisclosure of an asset. He also contends the court erred in denying his motion to set aside or reconsider its order based on his personal absence from the hearing, and the court failed to fully review the pleadings and evidentiary submissions. We reject his arguments, except we find merit in his challenge to the need-based attorney fees award. Accordingly, we reverse the portion of the order awarding Rogers $5,500 need-based attorney fees and costs, and in all other respects affirm the order. We also deny Rogers's request for attorney fees on appeal.

FACTUAL AND PROCEDURAL BACKGROUND

Neuendorf's Employment History and Job Search

Neuendorf is 50 years old and has a college degree. He worked for MP3.com as Senior Director of Operations, earning about $99,000 or more per year, from July 1999 until he was "laid off" in May 2003.^[1] He received a severance payment from MP3.com. Just prior to leaving MP3.com, he found another job with Preventsys. In late May 2003, he commenced work for Preventsys as Manager of Technical Support and Customer Service, earning about $80,000 per year. He was laid off from Preventsys on November 8, 2003. He received $370 per week unemployment insurance until May or June 2004. In January or February 2004, he obtained a real estate agent's license. He assisted a real estate broker on several occasions with her marketing operations, and received $1,500 in compensation from the broker.

In May 2004, he purchased a pool cleaning business for $36,000 with money loaned by his father. The pool business earned him a net profit of about $2,100 to $2,500 per month. However, because the business was not generating enough income and interfered with his ongoing search for a job in his managerial field, after three months he sold the business at a loss of about $5,000. He used the money from the sale to repay his father.

In deposition testimony, Neuendorf delineated his efforts to obtain employment in his field. He stated he has contacted friends, former employers and former employees. He also has a list of about 20 to 40 friends whom he contacts on a biweekly basis, and he has job agents at Monster.com and Jobs.com that inform him of jobs via e-mail. He has contacted about six recruiters, including Robert Haft, ConsultNet, K-Force, and Eastridge. He submits about five resumes per week. Since he was laid off in November 2003, he has had job interviews at Peregrine Systems, Defense Web, Leap Wireless, NCR, LPL, and Linspire. The positions offered annual salaries ranging from about $60,000 to $90,000. He has not been offered a position, although he has come close to being hired as he has received second interviews.

Neuendorf has been actively working with recruiters from K-Force and Eastridge. He has contacted the recruiter at K-Force once or twice a month, except for the three months he was in the pool business. A recent interview with LPL was set up by the Eastridge recruiter. LPL did not offer him a position, and informed him that he was overqualified. He also recently interviewed with Linspire, and he was optimistic that this company might offer him a job.

By stipulation of the parties, the court ordered a vocational evaluation of Neuendorf by Kathleen Young of Regain, Inc. After evaluating Neuendorf's employment background and the current job market, Young assessed that the San Diego job market for his managerial field was competitive. In a report dated December 20, 2004, Young opined that Neuendorf's earning capacity was about $80,000 per year, and that "with a diligent job search a reasonable time frame for [his] securing employment is approximately 6 months."

Young detailed 12 companies that she contacted in the field of customer service/technical support management, inquiring about the job market and whether there were job openings for a person with Neuendorf's qualifications. Eleven of the 12 companies had a job opening for which Neuendorf was qualified. The annual salaries ranged from $55,000 to $90,000, with the majority paying $80,000 to $85,000. Some companies stated that outsourcing had negatively impacted the job market, while others indicated there was no significant change in the job market in recent years.

After Young's vocational evaluation, Neuendorf submitted a declaration dated January 2005 stating he had contacted all the job referrals given to him by Young; he has made over 100 job contacts; and he continues to work with four recruiters. He disagreed with Young's assessment that a time frame could be set for when he could reasonably find a job, positing that it was impossible to make this estimate, and noting that when he hired employees in his former jobs he would receive 100 resumes in the first week.

In declarations and testimony at the January 2005 hearing, Rogers presented her views regarding Neuendorf's job search efforts. Rogers explained that Neuendorf first asked for a reduction in his $1,400 monthly child support obligation after he was laid off from his job at MP3.com in May 2003. At this time, he did not tell her that he received a substantial severance payment from MP3.com and already had a new job lined up at Preventsys.^[2] Unaware of his new employment, in the fall of 2003 Rogers informally agreed that Neuendorf reduce his monthly child support to $500 until he found employment.^[3] Rogers asserted that Neuendorf's failure to disclose his job at Preventsys showed that he was trying to avoid his child support obligation. Likewise, Rogers stated her view that Neuendorf had not made diligent efforts to seek comparable employment after he was laid off from Preventsys because he did not want to pay child support. Further, Rogers testified that Neuendorf was always late with his child support payments.

Neuendorf's Financial Assets

In July 2003, Neuendorf purchased a home for $569,000. He made a down payment of about $190,655 for this purchase, using about $65,000 proceeds from the sale of a condominium he owned as his separate property and a loan of about $125,655 from his father. His mortgage consists of interest-only payments for five years. Neuendorf has an $85,000 line of credit on his residence, with an outstanding balance of $19,000. He estimates his equity in his home and home furnishings to be about $450,000.

Neuendorf's 2003 tax returns show that he earned $80,716 from MP3.com (which included his severance payment) and $41,383 from Preventsys. His current wife (Danielle), whom he married in 2002, earned approximately $21,043 in 2003. In October 2004, Danielle was laid off from her job, and as of November 2004 was staying home with their four-month-old baby. Neuendorf and Danielle received about $400 per month for four months in 2004 from a woman who rented a room in their home. The family's monthly expenses are about $4,638.23.

At the time of his November 2004 deposition, Neuendorf had about $23,712 in his bank accounts. He stated that he owed this money to his father for a real estate investment they made involving the purchase of a condominium in April 2004. Although his father had not yet collected the money due to Neuendorf's continued unemployment, Neuendorf stated he did not want to spend those assets because he wanted to be able to pay his father.

Neuendorf's father, a self-employed real estate broker, provides money to Neuendorf to help pay his bills. His father gave him $1,000 per month for the months of January through May 2004, and in October 2004 gave him $2,000. His father has also paid his attorney fees for the dissolution and child support proceedings. Neuendorf stated he has a "running tab" with his father and a verbal agreement to repay his father (including the attorney fees) when he finds a job. In a January 2005 declaration, Neuendorf stated he had started working for his father 20 hours per week in exchange for his father forgiving his debt at the rate of $20 per hour.

Rogers's Financial Assets

Rogers, age 41, is employed as an attorney at the San Diego City Attorney's Office and earns $7,929 gross per month. She is remarried, and her husband, a superior court judge, earns $13,164 gross per month. She has $18,535 in her bank accounts, and estimates equity in her house and personal property at $175,000. Her monthly expenses are about $10,347 per month. Rogers submitted a declaration stating that she pays for a variety of extracurricular activities for the children and that Neuendorf does not assist her with these expenses.^[4]

DISCUSSION

I. Imputed Income for Child Support

Neuendorf argues the evidence does not support the court's decision to impute $65,000 income to him, positing that the record does not show he had the opportunity to obtain employment in his managerial field. We disagree.

At the January 2005 hearing and in a detailed written statement of decision, the trial court explained the grounds for its imputed income ruling. The court cited the vocational expert's statements that 11 of the 12 prospective employers she contacted had a job opening for which Neuendorf would qualify, with the majority of companies paying $80,000 to $85,000 per year. Further, the court relied on the expert's opinion that six months was a sufficient time period for Neuendorf to find a job in his field. The court noted that as of the January 20, 2005 hearing, about 14½ months had passed since Neuendorf was laid off. The court rejected Neuendorf's assertion that the six-month time period was speculative, reasoning that this was an assessment the expert was retained to make. The court was unpersuaded by Neuendorf's argument that the six-month period should be calculated from the date of the vocational expert's report, rather than from the date he was laid off from Preventsys.

The court found that the January 2005 declaration submitted by Neuendorf after the vocational expert's report did not satisfactorily outline his efforts to find employment. The court noted that Neuendorf's declaration failed to specify what companies had been contacted and what responses had been received. The court also found that Neuendorf's November 2004 deposition testimony, although discussing his efforts to look for jobs, lacked specificity. The court concluded that Neuendorf "may not have diligently pursued finding employment in his field since he was being provided with financial assistance by his father."

Further, the court credited Rogers's claim that Neuendorf was trying to avoid his child support obligation, based on the fact that Neuendorf informally asked her for a reduction in support after losing his job at MP3.com in May 2003 even though he received a severance payment and had acquired a job at Preventsys earning $80,000 per year. The court found that Neuendorf's request for a reduction while employed at Preventsys also reflected on his lack of efforts to find gainful employment in his field after he was laid off from Preventsys.

In appropriate cases, a trial court has discretion to determine child support based on a parent's earning capacity rather than actual income. (Fam. Code,^[5] § 4058, subd. (b); In re Marriage of Eggers (2005) 131 Cal.App.4th 695, 699 (Eggers); State of Oregon v. Vargas (1999) 70 Cal.App.4th 1123, 1125-1126 (Vargas).) When the payer has both the ability and the opportunity to work, the court may properly impute income. (Vargas, supra, at p. 1126.) To support an award of child support based on earning capacity rather than actual income, it is not necessary that the record show deliberate avoidance of the payer's financial responsibilities. (Ibid.) Although avoidance is an appropriate factor to consider, the only required showing is ability and opportunity to earn. (Ibid.) The payer has the burden to show lack of ability or opportunity to obtain employment. (Eggers, supra, 131 Cal.App.4th at p. 701.)

On appeal, we review a trial court's decision to impute income under the abuse of discretion standard. (Vargas, supra, 70 Cal.App.4th at p. 1126.) "'"The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court."'" (In re Marriage of Rosevear (1998) 65 Cal.App.4th 673, 682.)

Neuendorf does not dispute the fact that he has the ability to work, but contends the record does not show he had the opportunity to work in his field. "The 'opportunity to work' exists when there is substantial evidence of a reasonable 'likelihood that a party could, with reasonable effort, apply his or her education, skills and training to produce income.'" (In re Marriage of Smith (2001) 90 Cal.App.4th 74, 82.) In finding Neuendorf had an opportunity to work, the trial court placed great weight on the vocational expert's opinion that Neuendorf should have been able to secure employment in his field within six months after his layoff. The expert's report identified 11 companies that had a job opening for which Neuendorf was qualified. By the time of trial, Neuendorf had already been laid off from Preventsys for 14½ months. The trial court credited Rogers's claim that after Neuendorf's layoff from MP3.com, Neuendorf informally sought a reduction in child support by relying on this layoff, while failing to disclose that he had obtained a severance payment and new employment. From this fact, the court inferred that Neuendorf was reluctant to pay child support. The court also considered the fact that Neuendorf's father was available to relieve some of the financial strain of his unemployment, a circumstance which the court surmised lessened the pressure on Neuendorf to pursue employment with full diligence. Finally, the court found Neuendorf's descriptions of his job search efforts lacked specificity.

The record supports the court's ruling. The court could reasonably rely on the expert's assessment that six months was sufficient time to find a job within Neuendorf's field. The court could properly conclude that the lapse of almost double that time period^[6]--coupled with Neuendorf's financial reliance on his father and his misleading statements to Rogers about his financial situation--supported an inference that he had the opportunity to work but was making a less than diligent effort to secure employment so as to meet his child support obligation. Although Neuendorf's deposition does contain a description of the recruiters who were assisting him, the companies where he had interviewed, and his general job search strategy, the trial court was not compelled to find this showing sufficient to overcome the other indicia that Neuendorf was not making an adequate effort to find work.

To support his challenge to the trial court's imputed income ruling, Neuendorf points out that the vocational consultant was not critical of his job search efforts and there was no evidence that he refused employment. Although these are factors that could support a finding contrary to the trial court's finding, on appeal we defer to the trial court's ruling as long as it is reasonably supported by the record. The facts cited by Neuendorf are not sufficient to defeat the evidence supporting the court's finding of lack of diligence.

Neuendorf also argues that the trial court should have interpreted the expert's six-month calculation from the date of the expert's report, not from the date of his layoff. This interpretation was expressly considered, and rejected, by the trial court. We agree with the trial court's interpretation of the expert's report. The report simply identifies an estimated time frame for securing employment from a diligent search.^[7] The time period logically commences when the applicant should begin the job search; i.e., from the time of layoff.

We conclude the trial court did not abuse its discretion in imputing $65,000 annual income to Neuendorf.

II. Attorney Fees

Rogers requested attorney fees based on her need and Neuendorf's ability to pay (§ 2030); for enforcement of an existing child support order when there is need and ability (§ 3557); as a sanction for uncooperative conduct (§ 271); and as a sanction for nondisclosure of an asset prior to the judgment dividing the community assets (§ 2107). The trial court rejected her request for section 271 sanctions, but awarded $5,500 in fees and costs based on a finding that Rogers had a need for payment and Neuendorf had the ability to pay. The court also awarded $1,000 in fees as a sanction for nondisclosure of an asset. Neuendorf argues the record does not support these awards.

A. Attorney Fees Based on Need and Ability

The court found that Rogers had incurred attorney fees and costs in excess of $6,500 for Neuendorf's child support modification motion and her companion motions, which amount the court found was reasonable. After evaluating the parties' income and expenses, the court concluded Rogers had the need for a fee award and that Neuendorf had the ability to pay. The court noted that Rogers's net income was about $5,408 per month, and that her monthly expenses for herself, her current spouse and both children were approximately $10,347 per month. The court found that Rogers paid for a majority of the children's extracurricular expenses (e.g., prom dress, cheerleading, sports, etc.). Further, although Neuendorf and his wife were unemployed, Neuendorf had approximately $25,000 in his bank accounts and had a line of credit on his residence. The court noted Neuendorf's monthly expenses were about $4,638; he had incurred nominal debt relative to the length of time he had been unemployed; he had not paid any attorney fees associated with the dissolution or the current proceedings; and his father provided him with financial assistance from time to time. Based on these findings, the court ordered that Neuendorf pay Rogers $4,500 for attorney fees and costs for the child support modification and companion motions, as well as an additional $1,000 for fees incurred to respond to Neuendorf's posthearing motion to set aside or reconsider the court's order.

To ensure access to legal representation, family law courts are authorized to have one party pay the other party's attorney fees "if necessary based on the income and needs assessments." (§ 2030, subd. (a)(1).) The assessment is made by evaluating "(A) the respective incomes and needs of the parties, and (B) any factors affecting the parties' respective abilities to pay." (§ 2030, subd. (a)(2).) The critical factor in this inquiry is the relative financial circumstances of the parties. (§ 2032, subd. (b); In re Marriage of O'Connor (1997) 59 Cal.App.4th 877, 882-883.)

"The purpose of a [section] 2030 fee award is to ensure a party has adequate resources to adequately and properly litigate the controversy and to implement public policy favoring 'a parity between spouses in their ability to obtain legal representation' (equalizing litigating strengths). The aim is not to 'reward' the winner or 'punish' the loser." (Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2005) ¶ 14:155, p. 14-47; In re Marriage of Sullivan (1984) 37 Cal.3d 762, 768 (Sullivan); In re Marriage of Green (1989) 213 Cal.App.3d 14, 27.) An award under section 2030 is proper when it is "just and reasonable under the relative circumstances of the respective parties." (§ 2032, subd. (a).)

In assessing ability to pay, the court is not restricted to salary alone, but may consider "all the evidence concerning the parties' income, assets and abilities." (Sullivan, supra, 37 Cal.3d at p. 768.) The court may base its decision on ability to earn, rather than current earnings. (Id. at p. 769.)

Further, under section 2032, subdivision (b), the fact that a party has the financial resources to pay attorney fees is not necessarily a bar to a fee award to that party. Rather, "[f]inancial resources are only one factor for the court to consider in determining how to apportion the overall cost of the litigation equitably between the parties under their relative circumstances." (§ 2032, subd. (b).) Section 2032, subdivision (b) authorizes the court to consider the factors governing spousal support (set forth in section 4320) when

assessing whether to award attorney fees.^[8] Section 4320 refers to such matters as standard of living, age and health, and the balance of the hardships to each party. (§ 4320, subds. (a), (h) & (k).) The key factor for consideration is the relative need and ability of the parties to pay attorney fees. Thus, even if an applicant party has funds to pay his or her fees, relative need may be established if there is a '"disparity in the parties'

respective circumstances.'" (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 315; In re Marriage of O'Connor, supra, 59 Cal.App.4th at pp. 882-883.) Conversely, "consideration of the parties' 'relative' circumstances may preclude a [section] 2030 fee award between parties of roughly equal financial means." (Hogoboom & King, Cal. Practice Guide: Family Law, supra, ¶ 14:159.2, p. 14-49.)

Additionally, section 3557, subdivision (a)(1)(A) requires an award of attorney fees to a custodial parent in an action to enforce an existing child support order. However, as with section 2030, prior to making such an award the court must determine that a fee award is warranted based on the parties' respective needs and abilities to pay. (§ 3557, subd. (a).)^[9]

On appeal, we do not disturb a trial court's decision on the issue of attorney fees unless there is a clear showing of abuse of discretion. (Sullivan, supra, 37 Cal.3d at p. 769.) "'[T]he trial court's order will be overturned only if, considering all the evidence viewed most favorably in support of its order, no judge could reasonably make the order made.'" (Ibid.)

Drawing all inferences in favor of the trial court's award of fees to Rogers, we are unable to conclude that the award is reasonable under a need-based standard. Rogers's annual gross salary is approximately $95,148, and her husband's is $157,968, giving them a combined annual income of about $253,116. In contrast, Neuendorf and his wife are unemployed, or, from the perspective of imputed annual income, they earn $65,000 annual income. Comparing Rogers's $95,148 annual salary to Neuendorf's $65,000 imputed annual income, the parties have comparable income. When Rogers's spouse's income is added to the picture, Rogers's income far exceeds Neuendorf's income.^[10] Other relevant factors reveal the parties are in a comparable position--they both are about the same age, make a living in the professional world, have equity in their homes, and have accumulated funds in the bank. Under these circumstances, the record compels a conclusion that Rogers has an equal or superior ability to pay for her attorney fees when compared to Neuendorf's ability.

The facts that Rogers pays for the children's extracurricular activities without reimbursement from Neuendorf, and that Neuendorf's attorney fees have been to date absorbed by his father, are not alone enough to establish that Rogers has a need for attorney fees relative to Neuendorf's ability to pay. Viewing the parties' comparative financial situations, the disparity requirement in section 2030 designed to ensure parity of access to legal representation is not met and an award of fees under this statute is improper.

Similarly, although Rogers was statutorily entitled to attorney fees to the extent she was seeking to obtain child support arrearages, section 3557 also requires a need/ability showing. For the reasons noted above, that requirement cannot be satisfied here.

We recognize that Rogers additionally requested fees under section 271 as a sanction for Neuendorf's uncooperative conduct, and that a fee award under this statute may well have been supported by the record. The trial court found that Neuendorf consistently paid his support late, failed to pay support since May 2004, failed to disclose a community pension asset, and failed to provide documentation regarding the pension asset once it was disclosed. However, the court concluded that, notwithstanding this evidence, it would not award attorney fees as a sanction under section 271, noting that although it was "tempting" to do so, Neuendorf's conduct was not "all that different from the average pay[e]r-spouse that comes in here and doesn't want to pay . . . ." The court's explicit finding that section 271 sanctions were not warranted precludes us from affirming the fee award on this ground and precludes a remand for a consideration of fees under this section.

We conclude the trial court abused its discretion in awarding $5,500 in fees and costs to Rogers premised on the parties' respective financial needs and abilities.

B. Attorney Fees as Sanctions for Undisclosed Pension Asset

In response to Rogers's request for documents for purposes of the current child support modification proceedings, Neuendorf provided Rogers's counsel with two statements (for quarters in 2003 and 2004) reflecting his ownership of funds in a 401(K) pension plan created while he worked at MP3.com. Neuendorf worked at MP3.com from July 1999 to May 2003; his 401(K) contributions commenced in about the year 2000; and the parties separated in 2001. Thus, a portion of the MP3.com 401(K) funds were contributed during the parties' marriage. However, this asset had not been disclosed during the proceedings dividing the community property. At his November 2004 deposition, Neuendorf expressed surprise that the asset had not been disclosed, stated it was an oversight, and noted that if he had been trying to hide the asset he would not have included it in the documents he provided for the current child support modification proceedings.

On December 30, 2004, Rogers filed a motion requesting that the court (1) order Neuendorf to disclose the pension fund statements necessary for evaluation of the asset, (2) divide the community interest in the asset, and (3) award $1,000 in attorney fees as sanctions against Neuendorf. According to Rogers, Neuendorf had agreed at the November 2004 deposition to provide the pension fund statements, but still had not done so.

In a responding declaration, Neuendorf's attorney stated that the motion regarding the omitted asset was unnecessary. Neuendorf's attorney stated that at Neuendorf's deposition he (Neuendorf's attorney) had offered to provide the pension fund statements and to prepare the necessary order with no charge to Rogers. However, according to Neuendorf's attorney, Rogers had not accepted his offer but instead told her attorney she wanted to talk about it.

At the January 2005 hearing, Neuendorf agreed that the community interest in the MP3.com 401(K) asset should be divided equally between the parties. Further, the parties agreed Neuendorf's counsel would prepare the appropriate order to create a rollover of funds into an Individual Retirement Account for Rogers. However, Neuendorf still had not produced the pension fund statements needed to evaluate the asset.

At the January 2005 hearing, the court ordered Neuendorf to produce the pension fund statements, and also ordered Neuendorf to pay Rogers $1,000 in attorney fees as a sanction under section 2107 for failing to disclose the asset. The court noted that Neuendorf had disclosed other pension assets during the dissolution proceedings, and the court did not "know how he could possibly have forgotten" the MP3.com pension. Further, the court expressed consternation that the pension fund statements still had not been produced.

Parties to marital dissolution proceedings have an affirmative duty to disclose all of their assets and liabilities prior to judgment being entered. (§§ 2104, 2105; In re Marriage of McLaughlin (2000) 82 Cal.App.4th 327, 331.) Section 2107, subdivision (c) provides for an award of sanctions against a party who fails to comply with these disclosure requirements. The "[s]anctions shall be in an amount sufficient to deter repetition of the conduct or comparable conduct, and shall include reasonable attorney's fees, costs incurred, or both, unless the court finds that the noncomplying party acted with substantial justification or that other circumstances make the imposition of the sanction unjust." (§ 2107, subd. (c).)

Neuendorf argues it was improper to award fees under section 2107 because the failure to disclose was inadvertent, and there was no need for Rogers to file her motion regarding the omitted asset because he offered to stipulate to the division of the asset and to prepare the necessary order.

The trial court's ruling was a reasonable exercise of its discretion. The court was entitled to credit Rogers's claim that Neuendorf had agreed at the November 2004 deposition to produce the pension fund statements, and to find that there was no justification for his failure to produce them by the time of the January 2005 hearing. Regarding Neuendorf's claim that the nondisclosure of the asset was inadvertent, section 2107 does limit sanctions to intentional nondisclosure, but gives the court broad latitude to determine whether an award of sanctions is just. The trial court could reasonably conclude that the pension fund was not the type of asset that could be easily overlooked, and thus its nondisclosure, even if unintentional, arose from inexcusable gross negligence warranting sanctions. Neuendorf does not challenge the amount of the sanction, and there is nothing in the record suggesting it is unreasonable or unjust.

III. Motion to Set Aside or Reconsider the Order

Based on Neuendorf's Absence from the Hearing

Neuendorf challenges the court's denial of his posthearing motion for relief based on his personal absence from the hearing in January 2005. At the commencement of the hearing, Neuendorf's counsel noted that Neuendorf was not present and stated that he expected him to be there; counsel advised the court that the hearing could proceed because he did not anticipate calling Neuendorf to testify. Neuendorf never appeared at the hearing. On March 15, 2005, Neuendorf filed a motion requesting that the court set aside or reconsider its order based on his absence from the hearing. Neuendorf submitted a declaration explaining that he had not received notice that the hearing time had been changed from 1:30 p.m. to 10:30 a.m., and that he did not know the hearing had taken place until his attorney called him after the hearing. Neuendorf's attorney submitted a declaration stating that his office had been telephonically notified of the changed time by the court, but his office had failed to notify Neuendorf.

To support his motion for relief, Neuendorf provided a declaration in which he noted that if he had been present at the January 2005 hearing he would have: (1) provided the court with additional details about his job search; (2) explained that he was still attempting to obtain the information on the MP3.com pension asset; and (3) rebutted Rogers's testimony that he was consistently late with his child support payments. Regarding the job search issue, Neuendorf provided the court with a log detailing his job search efforts from September through November 2004, and an e-mail log reflecting where he had e-mailed his resume from September 2004 through January 2005.

The trial court denied Neuendorf's motion, ruling that if Neuendorf wanted to present additional information regarding his job search, he should have included it within the declaration he submitted for the January 2005 hearing as required by the local rules. The court also found that the vocational evaluator's report, and Neuendorf's failure to rebut it, defeated his claim that he was diligently seeking employment. Further, the court found that even after its comments regarding Neuendorf's "feeble rebuttal" to the report in his declaration, Neuendorf "does not now claim that he could have done better if he had been present." Finally, the court noted that the January 2005 hearing was not a default hearing, and concluded that Neuendorf's personal presence would not have affected the outcome and there was no miscarriage of justice.

In his motion, Neuendorf cited Code of Civil Procedure sections 473, subdivision (b), 1008, and 657 as the bases for his requested relief from the court's order.

A. Code of Civil Procedure section 473

Under Code of Civil Procedure section 473, subdivision (b), a party may obtain discretionary relief from an order based on mistake, inadvertence, surprise, or excusable neglect, if a reasonably prudent person under similar circumstances might have made the same mistake. (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 258 (Zamora).)^[11] We review the trial court's ruling under Code of Civil Procedure section 473 for abuse of discretion. (Zamora, supra, at p. 257.) Neuendorf's counsel conceded that it was his office's fault that Neuendorf was not notified of the change of time. A client may obtain relief for "a clerical or ministerial mistake that could have been made by anybody." (Id. at p. 259.) Particularly given the fundamental due process nature of a party's right to be notified of, and present at, a proceeding that may adversely affect his or her interests, Neuendorf would be entitled to relief if he can show that his absence prejudiced his presentation of his case at the January 2005 hearing. (Code of Civ. Proc., § 475; Cal. Const., art. VI, § 13 [judgment may not be set aside without finding of prejudice].)

The trial court found that Neuendorf's absence would not have affected the outcome and there was no miscarriage of justice. Because of the fundamental due process right involved, we will apply the heightened harmless beyond a reasonable doubt standard for prejudice. (See In re Angela C. (2002) 99 Cal.App.4th 389, 394-395.) As we shall explain, the record supports the trial court's finding of no prejudice.

A family law court is empowered to hear motions based upon declarations and to exclude oral testimony. (Reifler v. Superior Court (1974) 39 Cal.App.3d 479, 485; In re Marriage of Kelso (1998) 67 Cal.App.4th 374, 384; Cal. Rules of Court, rule 5.118 (b).) Although the trial court has discretion to allow oral testimony in appropriate cases, it is not required to do so. (Reifler v. Superior Court, supra, 39 Cal.App.3d at p. 485.) The Superior Court of San Diego County, Local Rules, rule 5.5.11(H) addresses this procedure for family law motions. The local rule states that oral testimony will not generally be received; requires the filing of declarations; and gives the trial court discretion to decide whether oral testimony should be allowed.

The job search and e-mail logs Neuendorf offered as exhibits in his motion for relief could have been attached to a declaration and submitted at the January 2005 hearing, and the logs were not the type of information necessitating oral testimony. Thus, Neuendorf's absence was not the cause of his failure to present these materials.

Moreover, the record shows the trial court was persuaded to impute income by the vocational expert's report revealing a significant number of job openings and an assessment that a diligent search would yield employment in about six months. Further, the court concluded that Neuendorf's declarations (submitted for the January 2005 hearing and his posthearing motion for relief) did not adequately rebut the information in the expert's report. It is evident that even if the court reconsidered its order based on the proffered additional details about Neuendorf's job search, the court would not alter its imputed income ruling. Neuendorf has not cited anything in the record that compelled the court to find he had adequately rebutted the expert's report.^[12] Because the expert's report was the decisive factor in the court's imputed income ruling, Neuendorf has not shown prejudice arising from his absence as to the job search issue.

The same conclusion applies to Neuendorf's proffered information about the MP3.com pension documents. In declarations submitted to support his motion for relief, Neuendorf stated he was still trying to obtain the documents, and he detailed the problems he was encountering with the pension fund administrator, which had changed hands several times. Neuendorf could have explained his claimed difficulties with document production via declaration at the January 2005 hearing. Further, the record shows the court's sanction ruling was not solely premised on the failure to provide the pension documents. Rather, the court found that there was no excuse for the failure to disclose the asset prior to the division of the community property. Thus, the delays in the document production were not an essential underpinning of the court's sanction ruling, and Neuendorf's proffered evidence on this point did not show his presence at the hearing would have altered the outcome.

Finally, we consider Neuendorf's proffered testimony refuting Rogers's testimony at the January 2005 hearing that he was consistently late with child support payments. Although at the January 2005 hearing Neuendorf's counsel had initially advised the court that he did not intend to call Neuendorf to testify, thereafter the trial court on its motion called Rogers to testify. Rogers testified that Neuendorf was consistently late with his support payments. If Neuendorf had been present at the January 2005 hearing, his counsel may well have requested that he be allowed to testify to refute Rogers's claim, and it is likely the court would have allowed him to do so.^[13]

However, the record shows the absence of Neuendorf's testimony on this point, standing alone, did not cause prejudice. It is undisputed that for several months prior to filing his September 29, 2004 motion to modify child support, Neuendorf made no child support payments, even though he had over $23,000 in his bank accounts. Thus, the court was presented with compelling evidence showing that he was dilatory in meeting his child support obligations. Given this evidence, the record supports the trial court's conclusion that even if Neuendorf had testified to refute Rogers's testimony of late payments, the outcome would have been the same.

B. Code of Civil Procedure Sections 1008 and 657

Under Code of Civil Procedure section 1008, subdivision (a), a party may obtain reconsideration of an order based on new or different facts, circumstances, or law, if the party provides an explanation for the failure to produce the new information at the original hearing. (Pazderka v. Caballeros Dimas Alang, Inc. (1998) 62 Cal.App.4th 658, 669-670.) We review a court's ruling on a motion for reconsideration for abuse of discretion. (Glade v. Glade (1995) 38 Cal.App.4th 1441, 1457.) Similar to Code of Civil Procedure sections 473 and 1008, under Code of Civil Procedure section 657 a party may obtain a new trial when there has been an accident or surprise materially affecting the rights of the party that ordinary prudence would not have guarded against (ABF Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 831-832), or when there is material evidence that could not have been discovered and produced with reasonable diligence (Sherman v. Kinetic Concepts, Inc. (1998) 67 Cal.App.4th 1152, 1161). We independently review the record to ascertain whether a trial court's denial of a new trial was a proper exercise of its discretion. (ABF Capital Corp. v. Berglass, supra, 130 Cal.App.4th at p. 832; Sherman v. Kinetic Concepts, Inc., supra, 67 Cal.App.4th at pp. 1160-1161.)

Neuendorf did not present any explanation as to why he did not submit the information detailing his job search efforts and his attempts to obtain the pension asset documents with his declaration at the January 2005 hearing. Thus, the trial court properly refused his request for reconsideration or new trial on the basis of this information. Regarding his proffered testimony denying Rogers's testimony about late payments of child support, it was undisputed that Neuendorf had failed entirely to pay child support for several months even though he had substantial funds in the bank. Given this evidence of nonpayment, the impact of any testimony by Neuendorf refuting Rogers's claim of late payments was not significant enough to require the court to reconsider its order or allow a new hearing. (See Bartschi v. Chico Community Memorial Hospital (1982) 137 Cal.App.3d 502, 509.)

The record shows that Neuendorf's counsel vigorously argued on Neuendorf's behalf at the January 2005 hearing. Although Neuendorf's personal absence was unfortunate, we are satisfied there was no prejudice to his rights requiring reversal and remand for a new hearing.

IV. Trial Court's Review of Record

Neuendorf contends the trial court did not fully review the submitted written documents before its ruling at the January 2005 hearing. At the close of argument and testimony at the January 2005 hearing, the trial court orally announced its rulings, which were later set forth in a statement of decision and written order. Neuendorf argues the trial court should have taken the matter under submission rather than making its decisions at the January 2005 hearing. Neuendorf advised the court of his concern about adequate record review in his reconsideration motion, and the trial court assured him that it had "read and digested every page of every document presented."

To support his contention, Neuendorf points to a comment by the court at the commencement of the January 2005 hearing, where the court stated: "Unfortunately, I haven't read everything that I ought to because I didn't get it in the mail, but we can work that out later on. Let me work my way through what I have here."^[14] Later, the trial court commented that it had not had "enough time with the file" and queried the parties about the amount of child support Neuendorf was paying after he was laid off from MP3.com. At another point, the trial court stated that it had not had time to read Roger's "memo" regarding the parties' custody time shares.

Notwithstanding these comments, the transcript of the January 2005 hearing clearly reflects that the court reviewed the materials and was fully apprised of the evidence presented by the parties. The court's statements during the course of the hearing refer to key evidentiary items such as the parties' marital settlement agreement, Neuendorf's deposition testimony and declaration, the vocational consultant's report, and the parties' income and expense declarations. Further, the court's queries and discussion during the hearing show its full understanding of the facts and arguments as set forth in the various documents filed by the parties. Viewing the court's comments in the context of the entire hearing, the record does not show a deficiency in the court's ultimate review of the evidence and pleadings.

Neuendorf also asserts the trial court called Rogers to testify as a substitute for review of the documents. The record does not support this contention. At the January 2005 hearing, the trial court stated "I need a little more time here. Unfortunately, I can't solve all my questions by just reading documents here." The court then asked that Rogers be sworn as a witness. The court's comment, as well as its subsequent questioning of Rogers, indicate it wanted additional or clarifying information to supplement what it had gleaned from the documents. The record does not suggest the court was considering Rogers's testimony in lieu of document review.

Neuendorf's challenge to the order based on the trial court's inadequate review of the pleadings and evidence is unavailing. Given our holding, we need not consider Rogers's contention that Neuendorf waived this argument by failing to raise it in timely fashion before the trial court.

V. Rogers's Request for Attorney Fees on Appeal

Rogers requests that we award her attorney fees on appeal as a sanction for a frivolous and bad faith appeal. Preliminarily, we deny Neuendorf's motion to strike Rogers's declaration supporting her request for fees on appeal and his accompanying request for sanctions, as the declaration was properly filed under California Rules of Court, rule 27(e)(2).

As evinced by our partial reversal, the appeal had substantive merit. Further, we are not persuaded that the appeal was brought solely to delay. (Code of Civ. Proc., § 907; see In re Marriage of Stich (1985) 169 Cal.App.3d 64, 77-78.) Accordingly, an award of attorney fees on appeal is not warranted.

DISPOSITION

The portion of the order awarding Rogers $5,500 in attorney fees and costs is reversed. In all other respects, the order is affirmed. Parties to bear their own costs on appeal.

HALLER, Acting P.J.

WE CONCUR:

McINTYRE, J.

AARON, J.

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^[1] Neuendorf explained that he actually resigned from MP3.com, after he was given the choice of either working for one-half his salary or resigning with severance pay. He stated this situation occurred as a result of a personnel reorganization; it was not due to any problems with his performance; and all his performance reviews were above average.

^[2] To refute Rogers's claim, Neuendorf's counsel declared that he advised Rogers's counsel about the MP3.com severance payment.

^[3] The $500 monthly support agreement was included in a formal order dated April 2004.

^[4] Rogers pays for her older daughter's car, and for expenses associated with such matters as gymnastics, cheerleading, baseball, tutoring, college applications, and religious education.

^[5] Subsequent statutory references are to the Family Code unless otherwise specified.

^[6] The court's October 1, 2004 effective date for the imputed income gave Neuendorf approximately 11 months to find comparable employment after his November 8, 2003 layoff from Preventsys.

^[7] The report states: "Based on the competitiveness of the job market, with a diligent job search a reasonable time frame for Mr. Neuendorf securing employment is approximately 6 months."

^[8] Section 2032, subdivision (b) states: "In determining what is just and reasonable under the relative circumstances, the court shall take into consideration the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party's case adequately, taking into consideration, to the extent relevant, the circumstances of the respective parties described in section 4320. The fact that the party requesting an award of attorney's fees and costs has resources from which the party could pay the party's own attorney's fees and costs is not itself a bar to an order that the other party pay part or all of the fees and costs requested. Financial resources are only one factor for the court to consider in determining how to apportion the overall cost of the litigation equitably between the parties under their relative circumstances."

^[9] Section 3557, subdivision (a)(1)(A) states: "(a) Notwithstanding any other provision of law, absent good cause to the contrary, the court, upon (1) determining an ability to pay and (2) consideration of the respective incomes and needs of the parties in order to ensure that each party has access to legal representation to preserve all of the party's rights, shall award reasonable attorney's fees to any of the following persons: [¶] (1) A custodial parent or other person to whom payments should be made in any action to enforce any of the following: [¶] (A) An existing order for child support."

^[10] Although there is a statutory bar to consideration of a new spouse's income for purposes of calculating child support (§ 4057.5), Rogers does not argue--nor have we uncovered--any such bar applicable to need-based attorney fees.

^[11] Relief is mandatory under Code of Civil Procedure section 473, subdivision (b) for attorney mistake only if the case involves a default or dismissal, which is not the situation here. (Zamora, supra, 28 Cal.4th at p. 257.)

^[12] Although in his January 2005 declaration Neuendorf generally stated that he contacted all the job referrals provided by the expert, his posthearing declaration and job search log do not provide any specifics on this claim. As best as we can ascertain, his posthearing e-mail log reflects contact with only two of the companies identified in the expert's report.

^[13] At the January 2005 hearing, Rogers also testified that Neuendorf requested a reduction in support without telling her he was employed at Preventsys. In his set aside/reconsideration motion, Neuendorf does not state that he wanted to respond to this testimony. Thus, there has been no showing that any additional evidence would have been presented on this point had Neuendorf appeared at the hearing.

^[14] The trial judge was a retired judge from Orange County.