Raisch v. Raisch CA6 ( 2013 )

Filed 8/27/13 Raisch v. Raisch CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
DOUGLAS E. RAISCH, H037520
(Santa Clara County
Plaintiff and Appellant, Super. Ct. No. FL098687)
v.
LAUREN K. RAISCH,
Defendant and Respondent.
Appellant Douglas Raisch and respondent Lauren Raisch are the parents of four
children. They separated in 2000 and thereafter divorced. A 2006 stipulated judgment
provided that Douglas was to pay specific amounts of child support and spousal support,
and that he was to share college expenses equally with Lauren. Douglas ceased paying
spousal and child support in early 2010, and he filed a motion in April 2010 seeking a
modification of child support to zero. In December 2010, he ceased paying for college
expenses for the two children who were then in college. In April 2011, Lauren brought a
motion to enforce the 2006 judgment and sought to recover attorney’s fees.
Both motions were heard in June 2011 and decided in August 2011. The court
granted Douglas’s motion to modify child support and reduced the amount of child
support, but it declined to make the modification retroactive to the April 2010 filing of
the motion. The court ordered Douglas to reimburse Lauren for college expenses that he
was required to share with her under the 2006 judgment, and it ordered Douglas to pay
$75,000 of Lauren’s attorney’s fees under Family Code section 2030. Douglas claims
that the court abused its discretion in refusing to make the child support modification
retroactive, requiring him to reimburse Lauren for college expenses, and awarding
Lauren attorney’s fees. We reject his contentions and affirm the trial court’s order.
I. Background
Douglas and Lauren separated in 2000 after a 16-year marriage that produced four
children. In 2005, Douglas and Lauren agreed to a stipulated order setting the amount of
child support and spousal support and providing for annual adjustments based on the
consumer price index (CPI). Spousal support was set to terminate on
December 31, 2010. The 2005 order also provided that Douglas and Lauren would
equally share college expenses for the four children up to a total of $480,000 per parent.
Douglas was also obligated under the 2005 stipulation to pay “one half of private school
tuition for the children . . . .” The 2005 stipulated order was incorporated into a 2006
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judgment. Lauren had primary custody of the children.
In February 2010, when his child support obligation was over $8,000 per month
and his spousal support obligation was just under $20,000 per month, Douglas
2
unilaterally ceased paying both child and spousal support. On April 1, 2010, Douglas
1
A 2003 stipulated order set the amount of child support differently, but it also
required Douglas to equally share with Lauren the cost of college education for each of
their four children up to a total of $480,000 from each parent. It was stipulated in the
2003 order that Douglas’s gross monthly income was $76,500. The 2003 order required
Douglas and Lauren to “split equally private schooling costs . . . .” The 2005 order
superseded the 2003 order.
2
At the time he filed his April 2010 motion, Douglas’s child support obligation was
$8,276.75 per month. It continued at that level through August 2010 and thereafter
increased, due to the annual adjustment, to $8,279.45 per month.
2
filed a motion for modification of his child support obligation. At that point, two of the
children were still minors, and the other two children were in college. Douglas claimed
in his April 2010 income and expense declaration that his monthly expenses were over
$34,000 per month, including $19,668 per month in spousal support. He declared that his
business had “ceased all operations in November [2009] and is insolvent.” Neither the
business nor Douglas had filed for bankruptcy. Douglas declared that he had “no current
income” other than unemployment benefits of $920 every two weeks. He claimed that
his gross pay for the year 2009 was less than $20,000. Douglas asserted that he “has no
current prospects for being obligated to advance further educational funds” for his
children’s college expenses.
Douglas’s motion claimed he had “an inability to pay any child support” and
“request[ed] a current modification, effective as of this filing.” Douglas asked that child
support “be reduced to zero” and asserted that “orders for private schooling and for
college funding need to be eliminated . . . .” (Underscore omitted.) He did not obtain a
hearing date for his motion. Despite repeated requests by Lauren and her attorney after
the filing of the motion, Douglas refused to provide any documentation to support his
motion. In December 2010, Douglas informed the two children who were in college that
he would no longer be contributing toward their college expenses.
In April 2011, Lauren filed a motion to enforce the 2006 judgment. She sought
unpaid child support and spousal support, and she sought reimbursement from Douglas
“for his half of payments made by Respondent toward the children’s college
expenses . . . .” In addition, she sought reimbursement for Douglas’s half of the minor
children’s private school expenses. Lauren further asked the court to award her $250,000
in attorney’s fees under Family Code section 2030 and sanctions of $150,000. On
April 29, 2011, Douglas and Lauren agreed to a stipulated order resolving the issue of
spousal support, and Douglas paid Lauren $207,500 in spousal support arrears.
3
In May 2011, Douglas filed another income and expense declaration in which he
claimed that his monthly expenses were $7,684, and that $5,784 of this amount was “paid
by others” (his current wife Lisa). He also reported that the minor children spent 95
percent of their time with Lauren and 5 percent of their time with him. On May 11, 2011,
Douglas filed an ex parte motion seeking, for the first time since he had filed his April
3
2010 motion, to set it for hearing.
Lauren opposed Douglas’s motion to modify child support. She asserted that his
child support obligation should not be modified at all because he had plenty of money
available to him, including money from tax refunds he had received, to provide him with
the ability to continue to pay the child support due under the 2006 judgment.
Alternatively, she urged that there was good cause to deny retroactivity of any
modification.
Both motions were heard in June 2011 and resolved in a lengthy written order in
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August 2011. The court granted Douglas’s motion to modify child support, modified his
child support obligation to reduce it to $1,352 per month, and made the modification
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effective on July 1, 2011. The court found that Douglas had failed to disclose in his
3
Douglas claims on appeal that he had “an inability to get a hearing date sooner
than June 22, 2011.” Not so. The record reflects that Douglas obtained a hearing date as
soon as he requested one.
4
At the June 2011 hearing, Lauren relied on In re Marriage of Leonard (2004) 119
Cal.App.4th 546 (Leonard) and argued that any modification should not be retroactive
because Douglas had had the funds to pay the previously set child support amount during
the potential retroactive period, and he was not unemployed during that period. Douglas
insisted that the funds he had available during that period were irrelevant because his tax
refunds were “not income” for child support purposes.
5
The court found that Douglas’s income going forward (from July 1, 2011) was
$5,000 per month. The court did not impute any income to Douglas. The court found
that Douglas’s income tax refunds were not “income available for support on an ongoing
basis” because there was no evidence that “these will be recurring in the future.” Hence,
(continued)
4
income and expense declaration or otherwise the funds that he had received from income
tax refunds and other sources between the filing of his April 2010 motion and
July 1, 2011. Due to “the substantial non taxable income received by [Douglas] during
the period of time for which a modification is sought,” the court decided that the
modification should not be retroactive. The court granted Lauren’s request for
reimbursement of college expenses. It also ordered Douglas to pay $75,000 toward
Lauren’s attorney’s fees and costs under Family Code section 2030. Douglas timely filed
a notice of appeal from the court’s August 2011 order.
II. Discussion
A. Denial of Retroactivity
Douglas does not challenge the court’s modification of his child support
obligation, but he argues that the trial court abused its discretion in refusing to make the
modification order retroactive.
The general rule is that it is a discretionary decision for the trial court whether to
make retroactive a child support modification order. (Fam. Code, § 3653, subd. (a).)
Where the child support modification order “is entered due to the unemployment
of . . . the support obligor,” it “shall be” retroactive “unless the court finds good cause not
to make the order retroactive and states its reasons on the record.” (Fam. Code, § 3653,
subd. (b).)
Douglas claims that the trial court’s modification order was “entered due to [his]
unemployment” and therefore was required to be retroactive in the absence of a good
cause finding with reasons stated on the record. Even if we assume that Family Code
section 3653, subdivision (b) applies rather than subdivision (a), we can find no abuse of
it did not use the income tax refunds in calculating child support. The court found
Lauren’s income to be zero.
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discretion in the trial court’s order, which was supported by a good cause finding with
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reasons stated in a written order.
“[A] trial court’s decision whether to make an order for child support retroactive is
reviewed under an abuse of discretion standard.” (Leonard, supra, 119 Cal.App.4th at
p. 555.) Douglas acknowledges that Leonard is the leading case delineating the “good
cause” requirement in Family Code section 3653, subdivision (b). “ ‘[G]ood cause’ under
section 3653(b) requires the court to make a good faith finding that nonretroactivity is
justified by ‘ “real circumstances, substantial reasons, [and] objective conditions.” ’
[Citation.] A determination under section 3653(b) that there is good cause to make
nonretroactive the modification or termination of a prior child support order must give
due consideration to the above stated statutory principles concerning child support.”
(Leonard, at p. 559.) These statutory principles require a parent to make the support of
the children his or her first priority and to support the children to the best of his or her
ability. (Leonard, at p. 556.) “[W]hether there is good cause to deny retroactivity under
section 3653(b) requires an evaluation of the children’s needs at the time. Those needs of
the children must be examined in the context of the then-existing ability of the parents—
both custodial and noncustodial—to provide child support.” (Leonard, at p. 560.)
“[D]etermining good cause under section 3653(b) requires a balancing of interests,
with the primary focus being to ensure, if possible, that ‘ “children actually receive fair,
timely, and sufficient support.” [Citation.]’ [Citation.] [¶] This balancing includes an
evaluation of the needs of the minor children and the potential hardship resulting to them
6
While Douglas’s April 2010 motion asserted that he was unemployed, the trial
court’s August 2011 order was, at least arguably, not “entered due to” Douglas’s
unemployment because the court found that Douglas was employed at the time that the
court entered its order with an income from employment of $5,000 per month. (Italics
added.)
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from the retroactive reduction or termination of support. Since each parent is obligated to
provide support according to his or her ability (§ 4053, subd. (d)), the court must examine
the then-existing financial circumstances of both parents. The court balances the needs of
the children against the interests of the supporting parent not to be faced with an unjust
and unreasonable financial burden resulting from a nonretroactive order. This latter
inquiry examines the supporting parent’s then-existing financial resources and ability to
pay for the support of the children during the period of potential retroactivity being
considered. Since the needs of the children are of paramount concern, where retroactivity
would result in demonstrable hardship to them, good cause may exist to deny a
retroactive support reduction or termination when the supporting parent has the ability to
bear that financial burden.” (Leonard, supra, 119 Cal.App.4th at pp. 560-561.)
Under Leonard, the keys to a decision on retroactivity are the “real circumstances”
affecting the children’s needs and the parents’ financial circumstances during the
potential period of retroactivity. Although Douglas claims that he “was in no better
financial position than Lauren,” the record indicates the opposite. Throughout the
potential retroactivity period, Lauren, as the primary caretaker of the children, incurred
expenses of more than $40,000 per month despite her lack of income, minimal liquid
assets, and significant debts. Her financial circumstances placed her in a precarious
position to bear the full weight of the children’s expenses during this period of more than
a year. Since Douglas’s discontinuation of support was abrupt, it did not allow for a
gradual period of adjustment to a lower level of expenses, but instead required Lauren to
pay ongoing expenses to which she and the children were already committed.
In contrast, Douglas, who spent little time caring for the children during the
potential period of retroactivity, was not burdened with their financial support. Although
he claimed no income from employment during the period from April 2010 to June 2011,
he received unemployment benefits and a total of nearly $1 million in other funds in
2010, which included $650,000 in income tax refunds that he received in November
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2010. Douglas acquired no debts or delinquencies during this period. Instead of using
any of these very substantial funds to pay his child support obligation, which amounted to
between $110,000 and $120,000 during the potential retroactive period and was
statutorily required to be his first priority, Douglas paid $80,000 to $100,000 to his
attorneys, put a $140,000 down payment on a new home without selling his existing
home (which was on the market for $1.5 million), and paid $7,600 per year to send his
daughter with his current wife to private school.
Despite Douglas’s argument to the contrary, the good cause inquiry under Leonard
does not require a parent’s financial resources to be viewed through a restrictive filter that
limits the court’s consideration of a parent’s “financial resources” to “income” as it is
defined in Family Code sections 4055 and 4058. As this court stressed in Leonard, the
relevant inquiry depends on “ ‘real circumstances, substantial reasons, [and] objective
conditions’ ” bearing on the children’s needs and the parents “financial circumstances”
and “financial resources.” Family Code sections 4055 and 4058 are concerned with
identifying the types of income that are considered in calculating the amount of child
support. (Fam. Code, § 4055 [uniform guidelines for calculating child support], Fam.
Code, § 4058 [income to use in calculating child support].) Family Code section 3653,
which governs the retroactivity of a modification order, makes no mention of Family
Code sections 4055 and 4058 or of their definitions of “income.” In making the good
cause decision, the trial court is not required to calculate a child support amount for the
potential retroactive period, as the child support amount for that period will either be the
previously ordered amount, if the new order is not retroactive, or the new amount if the
new order is retroactive. Since no calculation of a separate child support amount is
necessary, the parents’ “income” for child support purposes is not the relevant measure of
the parents’ financial resources for purposes of determining whether a modification order
should be retroactive.
8
Douglas asserts otherwise, but the record is clear that the trial court did not use
Douglas’s income tax refunds to calculate child support. In its August 2011 order, the
trial court explicitly found that Douglas’s income tax refunds were not “income available
for support on an ongoing basis” because there was no evidence that “these will be
recurring in the future.” Therefore, the court did not consider those refunds in calculating
Douglas’s income for child support purposes going forward. It is true that the trial court
also made a finding in its August 2011 order that the funds that Douglas received
between April 2010 and June 2011 (the potential retroactive period), including income
tax refunds, were “income available for support” within the meaning of Family Code
section 4058, but this finding had no materiality. Douglas claims that this finding reflects
that the trial court improperly used his receipt of income tax refunds. It did not. The
only improper impact that this finding could have had would have been if the income tax
refunds were utilized to calculate child support. They were not. The trial court’s denial
of retroactivity was not required to be based on Douglas’s “income available for
support,” and the reason provided by the court for denying retroactivity did not hinge on
this characterization of the nature of Douglas’s income. The trial court’s denial of
retroactivity was premised on Douglas’s receipt of “substantial non taxable income”
between the filing of his motion and the hearing of his motion. Whether this income was
“income available for support” or not, it still provided Douglas with the financial
resources necessary to pay his child support obligation during the potential retroactive
period.
The trial court’s “balancing of the hardships” under Leonard led to a decision that
was well within the bounds of its discretion. Douglas had nearly $1 million at his
disposal in the relevant period and chose to use none of it to support his children though
just $110,000 to $120,000 would have satisfied their needs. Instead, he paid lawyers
$80,000 to $100,000, put $140,000 into a new home without disposing of his existing
home, and continued to send his daughter with his new wife to private school. Clearly,
9
Douglas had the financial resources available to pay the child support that his children
needed, but he instead chose to devote his considerable financial resources to other things
and left Lauren, with no income, little in liquid assets, and substantial debt, to bear all of
the children’s considerable expenses. Douglas never contended that the children did not
need these funds during the potential retroactive period to pay for their schooling, food,
shelter, and activities. On this record, we can find no abuse of discretion in the trial
court’s conclusion that there was good cause to deny retroactivity.
Douglas also contends that the trial court failed to state reasons on the record. We
disagree. Although the trial court could have provided more explanation of its reasoning,
it expressly identified as a reason underlying its good cause finding the fact that Douglas
had received “substantial” funds during the potential retroactive period. This finding
established that Douglas’s financial resources gave him the ability to pay the child
support due during that period and that he simply chose not to do so. The court’s
reasoning supported a finding of good cause to deny retroactivity. We uphold the trial
court’s denial of retroactivity.
B. Reimbursement of College Expenses
Douglas claims that the trial court erred in ordering him to reimburse Lauren for
7
his share of their children’s college expenses as required by the 2006 judgment.
1. Background
The 2005 stipulation, which was incorporated into the 2006 judgment, provided
that “[e]ach party shall be responsible for one half of the cost of tuition, board, books and
reasonable living expenses for a college or vocational program for each child” with the
7
Douglas does not challenge the court’s order that he bear his share of the
children’s future college expenses.
10
limitation that college expenses “shall in no event be higher than a total of $480,000 for
8
the four children per party.” The stipulation provided that “Judge Roggia [(the trial
court)] has jurisdiction to resolve any disputes related to the choice of college or program
and the expenses each parent may be held responsible for.” (Italics added.)
Beginning in December 2010, Douglas ceased paying any college expenses, and
Lauren bore the full amount of the college expenses for the two children who were then
in college. She sought reimbursement of the expenses that she had paid instead of
9
Douglas. Douglas asked the court to eliminate his obligation to pay college expenses.
The court rejected Douglas’s request on the ground that this was “a contractual
obligation in the stipulation agreement such that the Court is without jurisdiction at this
time to modify the same.” The court granted Lauren’s request for reimbursement of
college expenses and confirmed that Douglas “is obligated to fund his half of the college
expenses pursuant to the Order up to the cap of $480,000.”
2. Analysis
Douglas relies on one case and a comment to a section of the Restatement Second
of Contracts to support his claim that reimbursement could not be ordered. Neither of
them supports his claim.
The case, In re Marriage of Smith & Maescher (1993) 21 Cal.App.4th 100(Smith), involved a Massachusetts dissolution judgment that incorporated a marital
settlement agreement (MSA) requiring the husband to pay the colleges expenses for the
children. (Smith, at pp. 103-104.) The MSA stated: “The Husband agrees, provided that
8
Douglas and Lauren were each obligated under the 2005 stipulation to contribute
money to college accounts for each child, but their financial obligations for college
expenses were not limited to the amounts in these accounts.
9
Lauren also sought an order that Douglas fund accounts to cover college expenses
for the children.
11
he is financially capable to do so, to provide for the undergraduate college education of
both children at an accredited institution of higher learning.” (Smith, at p. 104.) After
paying for the first three years of college for one child, the husband stopped paying the
child’s college expenses. The wife then paid the child’s college expenses for a fourth
year. (Ibid.) The child failed to complete college, but the husband then gave the child
$10,000 and suggested that the child use it to reimburse the wife. The wife refused to
accept the money from the child. (Smith, at pp. 104-105.) The wife filed a civil action in
California to recover as damages the college expenses of $11,109 she had expended for
the child’s fourth year of college. (Smith, at p. 105.) The issue in Smith was whether the
wife could “maintain a damage action” for breach of a third-party beneficiary contract.
(Ibid.) The Court of Appeal concluded that the wife had a “right to enforce” the
husband’s promise, but she did not have a right to bring an action for damages. (Smith, at
p. 106.) The court explicitly did not address “the issue of whether [the wife] may have a
remedy against [the husband] for reimbursement . . . .” (Smith, at p. 108, fn. 7.)
Smith has no application here. Unlike the wife in Smith, Lauren did not bring an
action for damages against Douglas. Lauren asked the court that had entered the 2006
judgment to enforce it. This issue was not addressed in Smith since the court expressly
stated that it was not considering whether the wife had a remedy for reimbursement. “A
judgment or order made or entered pursuant to [the Family Code] may be enforced by the
court by execution, the appointment of a receiver, or contempt, or by any other order as
the court in its discretion determines from time to time to be necessary.” (Fam. Code,
§ 290, italics added.) Thus, the trial court had discretion to enforce the 2006 judgment by
ordering Douglas to reimburse Lauren.
The Restatement Second of Contracts comment upon which Douglas relies is
similarly unhelpful. Restatement Second of Contracts, section 307 states: “Where
specific performance is otherwise an appropriate remedy, either the promisee or the
beneficiary may maintain a suit for specific enforcement of a duty owed to an
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intended beneficiary.” Comment d, the one to which Douglas refers, reads: “d. Gift
promise. Where the promisee intends to make a gift of the promised performance to the
beneficiary, the beneficiary ordinarily has an economic interest in the performance but
the promisee does not. Thus the promisee may suffer no damages as the result of breach
by the promisor. In such cases the promisee’s remedy in damages is not an adequate
remedy within the rules stated in §§ 359 and 360, and specific performance may be
appropriate. See Illustration 1 to § 305. The court may of course so fashion its decree as
to protect the interests of the promisee and beneficiary without unnecessary injury to the
promisor or innocent third persons. See § 358.” (Rest.2d Contracts, § 307, com. d.) As
was the case with Smith, this comment concerns the propriety of an action for damages.
Lauren’s request that the court enforce the 2006 judgment was not an action for damages.
Lauren sought enforcement of the 2006 judgment under Family Code section 290.
The court ordered Douglas to comply with the 2006 judgment by reimbursing Lauren for
college expenses that he was obligated to pay but had not paid. Douglas has failed to
demonstrate that the court lacked the power to require him to comply with the 2006
judgment by reimbursing Lauren.
C. Attorney’s Fees
Douglas contends that the trial court abused its discretion in awarding Lauren
$75,000 in attorney’s fees under Family Code section 2030. He claims that the parties’
relative circumstances did not justify such an award.
The court found that Lauren had incurred more than $350,000 in attorney’s fees
and costs. The court found that Douglas had had available to him substantial funds that
he could have used to pay his child support and spousal support obligations. Instead, he
unilaterally stopped paying these obligations and “conceal[ed]” these funds, thereby
prolonging and complicating the litigation. “Based on the entire circumstances of the
case and the respective financial positions of the parties,” the court ordered Douglas to
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pay $75,000 to Lauren as his contribution toward her attorney’s fees and costs under
Family Code section 2030.
Family Code section 2030 authorizes a court to make an award of attorney’s fees
and costs where there is a “disparity” in “ability to pay” for legal representation. Douglas
had received nearly $1 million in 2010 but had triggered this litigation by refusing to pay
child support, spousal support, or college expenses that he was obligated to pay under the
2006 judgment. Yet he had managed to pay his own attorney’s fees. At the time of the
June 2011 hearing, Douglas was employed, and the court found that his income was
10
$5,000 per month. In contrast, Lauren had no income at all and significant debts, and
she had had to bear all of the children’s expenses throughout the litigation. She had not
been employed since 1989, and she had not been able to obtain “meaningful
employment” due to her responsibilities as the minor children’s primary caretaker. The
trial court could have reasonably concluded that there was a significant financial disparity
between the parties. Douglas had received large amounts of funds in 2010 and had a
regular income at the time of the hearing, while Lauren had no income at all. The court
did not abuse its discretion in requiring Douglas to bear a small portion of Lauren’s
burdensome attorney’s fees and costs for litigation that Douglas triggered by failing to
comply with the 2006 judgment.
10
At trial, Douglas testified that he anticipated an income of $4,000 per month going
forward.
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III. Disposition
The trial court’s order is affirmed.
_______________________________
Mihara, J.
WE CONCUR:
_____________________________
Premo, Acting P. J.
_____________________________
Márquez, J.
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