News

July 2011

An individual with no gross income for tax purposes or business profits for accounting purposes may nevertheless have income for spousal support purposes.

In Marriage of Graham the Fourth District Court of Appeals in Orange County ordered the entrepreneur Husband to pay spousal support even though he reported zero income to the IRS because he received a salary disguised as a loan to his companies.

The Grahams signed a Marital Settlement Agreement in 2001 after 25 years of marriage whereby Husband was required to pay $3,000 per month to Wife. In January 2008 Husband sought an order terminating spousal support order because of a decrease in his earnings. In 2008 Husband paid no federal income tax due to severe investment losses. However, Husband said he received a salary from his corporations, but only because he loaned the companies $450,000.

The trial court found that Husband’s income in 2008 was $12,091 per month and $8,012 per month in 2009 based on testimony from his expert and ordered Husband to pay Wife $2,500 per month in spousal support and $20,000 in attorney fees.

On appeal Husband argued that the trial court abused its discretion because it found that he had income when he was merely transferring assets back and forth between business and personal accounts and not generating income. The Court of Appeals disagreed because it found that Husband’s income was the money paid to him regularly for performing his job and that was available to him for purposes of paying his own recurring monthly expenses. Applying Family Code §4320(c), The Court found that Husband had the “ability…to pay support, taking into account the supporting party’s earning capacity, earned and unearned income, assets and standard of living.”

Because Husband is an entrepreneur and not an employee with a steady paycheck, determining his income was complicated. However, Husband could not convince the Court that because he had no income for IRS purposes, he did not have income to pay spousal support.

Additionally, the Court rejected Husband’s argument that his salary is really a repayment of a loan and not income. The Court reasoned that he chose to invest his assets to keep them viable during the recession, but he was able to draw a salary from his operating companies. Further, the Court was not required to focus solely on his business losses in determining his income.

Cases like Marriage of Graham demonstrate that a party seeking to reduce or terminate spousal support cannot necessarily hide behind federal tax returns reporting zero income.

June 2011

A renewed domestic violence restraining order must be extended for either five (5) years or forever.

In Avalos v. Perez the Court of Appeals in Orange County reversed the trial court’s decision to extend a domestic violence restraining order for two (2) years.

Ms. Avalos filed a restraining order against Mr. Perez in 2008. At the Order to Show Cause, the Court issued a restraining order for two years. In May 2010 Ms Avalos returned to court to seek an extension of the restraining order because one of Mr. Perez’s friends visited her place of employment and told her that Mr. Perez sends her “greetings.” The trial court ultimately renewed the restraining order for two more years.

On appeal, the Court ordered the restraining order to be extended five years 2015. According to California Family Code §6345(a) a domestic violence restraining order cannot exceed five years, but the protected party may request a renewal of the order for either five more years or permanently, even without a showing of any further abuse.

The Court cited Ritchie v. Konrad (2004) 115 Cal.App.4^th 1275, 1290, which held that a trial court should renew a domestic violence restraining order if “the protected party entertains a ‘reasonable apprehension’ of future abuse.” Also, if the restrained party does not object, the court must assume that party has a good reason for not objecting. Ritchie at 1284.

Although the trial court has discretion to determine the length of the initial stay-away order for up to five years, the Court held that the legislature intended for renewals to be for five years or permanently. This policy saves victims of domestic violence the ordeal of returning to court every three years to renew the orders and gives them peace of mind.

Finally, Avalos v. Perez underscores the fact that domestic violence restraining orders prevent the restrained party from sending intermediaries to convey messages to the victim. If you are the victim of domestic violence and the other party continues to contact you indirectly, you may have a good case for a permanent restraining order.

The one-year limitation for seeking to set-aside a judgment under Family Code §2122(a) does not apply to set-asides of support orders on the grounds of fraud.

The Second District Court of Appeals recently ruled in re Marriage of Zimmerman that the one-year limit for seeking to set aside a judgment under Family Code §2122(a) does not apply to set-asides of support orders. Affirming the trial court, the Court of Appeals held that applying Family Code §3691(a), which contains a six-month limit for seeking a set-aside of support orders on the grounds of fraud, was proper.

In 1997, the trial court issued the dissolution judgment. The parties filed many post-judgment motions relating to the issues in their divorce. When Mr. Zimmerman filed a motion to modify child support and to establish arrears in 2003, the trial court ordered him to pay $1,211 per month for the parties’ three children plus child care expenses, set arrearages at $14,499 and ordered him to pay $500 per month toward those arrears. In February 2006, Ms. Zimmerman filed a motion to modify child support, which Mr. Zimmerman countered with a request for reduction due to the birth of a child from a subsequent marriage. In January 2007, the trial court reduced Mr. Zimmerman’s child support obligation, child care expenses, and arrears. The court reserved on the retroactivity of this order, as it was waiting for additional financial information from Mr. Zimmerman. A review hearing was set for November 2007.

Prior to the November hearing Ms. Zimmerman filed documents intending to show that as far back as 2002, Mr. Zimmerman provided fraudulent financial information to the court. She claimed she first learned of the fraud in 2007 and wanted child support modified retroactive to 2002. The trial court found that her submissions were late and refused to read them. Ms. Zimmerman’s attorney had not filed the motion to set-aside. The court notified her counsel to do so quickly to avoid the running of the statute of limitations.

In April 2008, Ms. Zimmerman filed another motion to modify child support because her employment income decreased. The court increased the support order. In June 2008, Ms. Zimmerman moved to set that order aside and requested a retroactive modification based on Mr. Zimmerman’s alleged fraud and perjury regarding the prior orders. In September 2008, the trial court ruled that her motion was barred by Family Code §3691(a), which imposes a six-month limit for setting aside support orders. The Court also sanctioned Ms. Zimmerman for failing to file this motion after the court had advised counsel to do so much earlier.

Ms. Zimmerman appealed, but the Second District affirmed. The main issue on appeal was whether Family Code §3691 or Family Code §2122 applied. Ms. Zimmerman contended that the latter statute, which affords a one-year statute of limitations for setting aside judgments based on fraud, was applicable. The Court of Appeals disagreed. First, motions brought under §2122 apply to motions to set aside a judgment, while §3691 applies to orders. Per Family Code §3691, “[t]he grounds and time limits for an action or motion to set aside a support order, or any part or parts thereof, are governed by this section and shall be one of the following…actual fraud or perjury.” Additionally, the statute provides that the time limit for filing an action for fraud or perjury is six months from the date the moving party discovered or reasonably discovered the fraud or perjury. Ms. Zimmerman filed her motion to set-aside the support order seven months after she became aware of the alleged fraud.  Ms. Zimmerman also argued that the November 2007 hearing was essentially a hearing under §3691, but the court was not persuaded because that proceeding did not qualify as a set-aside.

Finally, Ms. Zimmerman’s fall-back position was that even if §2122 was inapplicable, the Court could set-aside the order on the grounds of extrinsic fraud. The justices disagreed because §3691 statutorily preempts that traditional ground of equitable relief, making it the only remedy for setting aside a support order.

In conclusion, the Second District affirmed the trial court’s application of $§3691 and that Ms. Zimmerman’s motion was barred by the statute of limitations because she was put on notice of the alleged fraud in November 2007, but failed to file her motion until more than six months later. The Court of Appeals also upheld the discovery sanctions against Ms. Zimmerman.

Juvenile Court did not err in refusing to order reunification services for a mother who refused to stop smoking and failed to acknowledge the danger posed by the child’s sex-offender father.

In K.C. v. Superior Court, the first California case to base a custody decision on a parent’s smoking addiction, the Third District Court of Appeal affirmed the juvenile court’s ruling that refused reunification services for a parent who refused to stop smoking and ignored the danger posed by the child’s sex-offender father.

Mother’s child was removed from her custody after the baby tested positive for nicotine. The Health and Human Services Agency (HHSA) filed a dependency petition on the baby’s behalf, alleging Mother had a history of nicotine abuse, failed to attend alcohol and drug counseling, had other children removed from her care and failed to acknowledge the risk posed by Father, who was convicted of having sex with a five-year old. Father’s probation officer warned that Mother was not responsible enough to supervise Father’s visits with the children. Mother, on the other hand, argued that she had reduced her daily intake of cigarettes.

At the jurisdictional hearing to determine whether the dependency petition would be sustained, HHSA testified that the baby’s fingers were always stained from smoking. According to HHSA, Mother left the baby unattended while she was outside smoking. Mother testified that when she found out she was pregnant she cut down her smoking and used a stop-smoking aid, but she relapsed. She also testified that she was taking a class to protect minors from sexual predators. The juvenile court sided with HHSA and sustained the petition.

At the dispositional hearing Mother admitted she considered terminating her pregnancy and testified that she was laughed at in group therapy for seeking treatment for a smoking addiction in that setting. The juvenile court denied reunification services pursuant to Welfare & Institutions Code §361.5(b)(10) and (11) because in refusing to enter treatment for her nicotine and caffeine addictions, Mother failed to make reasonable efforts to address the problems that led to the child’s removal.

On appeal, Mother contended that the juvenile court should not have applied §361.5(b)(10) and (11) because she made reasonable efforts to rectify the problem that led to the removal of the child from her care. The justices explained that under the statute the court could refer to the cases involving her other children to see whether reunification services had been terminated and determine whether she made reasonable efforts to address her problems at that time. According to the Court, the same problems that plagued Mother before were still present. Mother’s reasonable efforts do not require a cure, but they must be more than “lackadaisical or half-hearted.” Mother patently refused to attend programs to combat her smoking addiction, and she had a spotty attendance at classes to protect minors from sexual predators. Therefore, the juvenile court did not err in denying reunification services.

It is notable that one of the two justices making up the majority concurred only with the result, but not with the reasoning. This fact provides some ammunition for smoking parent’s attorney should this case be relied on as precedent in cases with a parent facing a similar problem. Also, the fact that the Mother could not appreciate the danger the sex-offender Father posed likely carried the day, as it likely would in any custody case.

Accessing and Disclosing Confidential Emails of Another Warrants a Restraining Order

In the unpublished opinion of Marriage of Nadkarni (Dist. 6 (Filed April 24, 2009)), the California Appellate Court ruled that Wife’s application and declaration for a restraining order against Husband were sufficient for a showing of abuse within the meaning of the Domestic Violence Prevention Act (DVPA).  Husband’s conduct included accessing, reading, and publicly disclosing the content of Wife’s confidential emails.

Husband sought to modify child custody orders, accusing Wife of leaving the children alone while she was in India.  Husband attached several of Wife’s emails showing that Wife lied to Child Protective Services (CPS) and told her children to lie in regards to her whereabouts.  Husband claimed he had no choice but to access Wife’s email account because the children’s safety was at stake. Wife was granted a temporary restraining order (TRO) on the grounds that her emails contained confidential information.  At the hearing for the permanent restraining order, the trial court ruled that Husband’s conduct did not rise to the level of the DVPA.  However, the appellate court reversed and remanded the case holding that that Husband’s conduct fell within the DVPA because Husband’s conduct of accessing, reading, and publicly disclosing the content of Wife’s confidential emails could cause her to suffer “shock” and “embarrassment,” to fear the destruction of her “business relationships,” and to fear for her safety.  The court reasoned that the DVPA authorizes injunctive relief even when the abuse alleged is not the actual infliction of physical injury or assault.

The DVPA authorizes restraining orders to prevent recurrence of domestic violence abuse.  Abuse may include an intentional or reckless attempt to cause bodily injury, sexual assault, or apprehension of imminent serious bodily injury.  In addition, California Family Code § 6320 of also enjoins several types of nonviolent conduct that may constitute abuse within the meaning of the DVPA.