Jody Michael Neal and Karen Lynne Neal
Case No: 1439503
Hearing Date: Tue May 14, 2019 10:30

Nature of Proceedings: OSC re Contempt; Req. for Order: Modification Spousal Support (2)

Respondent’s (“mother”) (1) Req. for Order: (2) OSC re Contempt; (3) Petitioner’s (“father”) Req. for Order: Modification Spousal Support

Both parties in pro per

Rulings:

1. The case was called on May 7 and, unaccountably, no one appeared. The matter was continued from 5/7 for one week when the Court would make a decision on all three matters at the same time on 5/14. The Court said it wanted to see the children’s college education “statements” that father refers to in his declaration. Since he did not appear, the statements were not presented on May 7 but have subsequently been presented in a pleading submitted by father.

2. Mother’s OSC re contempt is DENIED without prejudice; it may be renewed at a future date if appropriate.

3. Mother’s request to determine arrears is DENIED without prejudice; it may be renewed at a future date if appropriate.

4. Mother’s request for an earnings withhold order is DENIED without prejudice; it may be renewed at a future date if appropriate.

5. Based upon the analysis below father’s spousal support is DENIED.

Background: This case was originally scheduled for mother’s OSC re contempt to be heard on 5/7, and mother’s RFO for modification of spousal support to be heard on 5/7. Father then scheduled his RFO to modify spousal support for 5/14.

There is a lot of history to the case. This case was originally filed in 1/2014 and has seen a lot of courtroom time. Indeed it was just on calendar on 3/26/19 when the Court made rulings on some special issues not related to any of the present RFO’s etc.

Mother’s RFO:

Filed 4/9/19; set for 5/7; seeks $1,100/mo in spousal support from father; other orders requested are:

1. Determine Arrears (FL—490)

2. Earning Assignment Order for Spousal Support (FL-435)

3. Earning Withhold Order for Support (WG-OO4)

Mother supports her request with a declaration and the Court will just summarize: Following the divorce trial in this action in September 2015, father was ordered to pay her monthly spousal support of $1,100.00; he failed to pay the monthly amounts owed for February, March and April 2019, notwithstanding requests that he make payment; she anticipates that he will fail to pay for May 2019; following the divorce trial in this action in September 2015, father and she were to share equally in the children’s medical costs including health insurance premiums; on February 1, 2019, she agreed to a stipulation and order providing that she would continue to provide their two minor children with health insurance available through her employer, and that father would reimburse her for one-half the premium costs; monthly insurance cost is $342; the Court’s order was just entered on February 1, 2019; father has failed to pay her the $171 per month that he owes for January, February, March, and April; anticipates he will fail to pay for May 2019.

She depends on the spousal support payments in order to pay basic monthly living expenses; father has been trying to leverage the potential for him to agree to pay his past due arrearages to attempt to get her to agree to eliminate or reduce his monthly spousal support obligations; cannot do so; needs the monthly spousal support; moreover, she just voluntarily agreed to eliminate the monthly child support payments, which was a significant reduction in her monthly cash flow; with this request for order, she seeks to have the Court (1) determine the amount of arrearages for past due spousal support and health insurance premium reimbursement; (2) issue an Earnings Assignment Order; and (3) issue an Earnings Withholding Order. She attached Forms FL-490, FL-420, FL-421 (for support and premium reimbursement).

Mother’s OSC re contempt

Filed 4/10 and set for 3/7; claims father is in contempt of Court in the amount of $4,400; specifically that he has failed to pay spousal support of $1,100 per month for February, March and April; anticipates he will fail to pay spousal support in May 2019; has included it in FL-411; plus interest at 10% legal rate. Additionally, on February 1, 2019, the parties stipulated to eliminate child support and to split the monthly cost of health insurance premiums; she pays the monthly premium cost of health insurance she gets through her employer, which is $342; despite the stipulation and order, father has failed to reimburse her $171 per month for January. February, and March; anticipates he will fail to pay for April also; adds interest at 10% legal rate.

Father’s RFO:

Filed 4/11; 46 pages in length; will summarize only; set hearing for 5/14; seeks modification of spousal support payments which are presently $1,100; testifies there has been a significant change in circumstances; his income has dropped substantially from the time of the original order while his child rearing expenses have increased; mother has become financially self-sufficient since the order was made.

Father’s I&E declaration:

49 years old; last filed his tax return in 2017; occupation is real estate agent; reports he now gets paid $1,000/mo; but also reports that his average income for the last 12 months has been $3,000/mo; health insurance premiums $154/mo; minimal assets with all personal property estimated FMV at -$135,000; married [wife earns $3,000-$6,000/mo]; four children [son, daughter and two stepchildren, all 12 to 15 years old]; living expenses $12,518/mo. [rent $6,900/mo]; amount of expenses paid by other $3,450/mo.

In summary he testifies there has been a significant change in financial circumstances; sold his business; living from the proceeds; since beginning career as a real estate agent in 2016, business sale proceeds have been exhausted; taken on significant personal debt to sustain family; since January of this year, he has been unable to meet daily living expenses, debt payments and spousal support payments; based on the current situation and the other facts set out, he requests the Court make the following orders:

a. Modify spousal support to $0/month beginning April 15th, 2019

b. Court to maintain jurisdiction on support.

He testifies that there was a two-day trial September 3 and 4 , 2015, for unresolved issues; it was a 19 year marriage; the judgment was entered October 26, 2015; spousal support was set by the Court at $1,100/month based on a finding that his income was $11,500 per month; mother’s income was found to be $3,750 per month; a stipulated order was entered February 1, 2019, where child support was set to zero and the current living situation was memorialized that the children are living with him full-time.

He testifies that mother has become self-sufficient since separation in 2013; has increased her skill level and training as a bookkeeper and accountant; he believes she has become a Certified Public Accountant or equivalent; has been employed by the same firm for several years; has done a great job of controlling her expenses; has received several substantial cash distributions from an inheritance over the last few years; she is not encumbered by the day-to-day expense of raising two teenagers; because of the substantial change in circumstances, namely the drastic drop in his income and cash available for support combined with Karen’s self-sufficiency, her decreased expenses and increasing in training and ability to earn; he asks the Court to grant his requested orders.

Father’s response to mother’s OSC re contempt.

Filed 4/23; testifies that he is current on support and insurance reimbursements through the end of April 2019; that the amount of arrears is zero; there is no cause for assignment or withholding since there is no past due amount; he has a RFO to modify support on the Court’s calendar for 5/14; attaches proof of payments.

Father’s declaration in support of his request to reduce spousal support to zero.

Filed 4/23; in addition to what he already has said, he testifies that his net worth is negative; personal loans are in excess of value of all personal property and liquid assets; that he rents a home in Santa Barbara with his wife and four teenage children; have not taken a vacation in five years; no longer owns any real estate; investments are depleted except for the children’s college savings accounts [did not see how much were in those accounts]; owns 2009 Ford and 1964 Volkswagen outright; spends all of their money on basic needs; using credit cards to meet daily living expenses. Testifies that mother’s assets and obligations, including separate property, are:

1. A one-bedroom Townhouse – 965 Miramonte Drive # 3 – purchased 12/27/2018 for $465,000 (encumbered by a $340,000 1st deed of trust)

2. 2012 BMW X5 – $15,000 est.

3. 2009 Toyota 4-runner $3500 est.

4. Northern Trust Inheritance – $200,000 est

Testifies that his assets and obligations, including separate property, are:

1. Personal Property and Vehicles – $75,000

2. Loan from friend – (-$105,000)

3. Credit Card Debt – (-$12,000)

4. Commission Advance – ($30,000)

Mother’s response and reply.

Filed 4/26 and 5/1; as for the OSC re contempt, father only paid the principal amounts owed for spousal support and health insurance premium reimbursement, through April 2019, after she was forced to go through the trouble of filing papers with the court; he refused to pay before; when he did pay, he was late; he never sought the permission of the Court to skip his payments, his behavior suggests he thinks he can do and say whatever is convenient for him at the time; even though the request for orders and OSC re contempt identified that he owed interest (albeit, modest amounts of interest) on the arrearages, he did not pay them; he intentionally disregarded the law providing that interest at the legal rate accrues on past due balances.

As for father’s request to modify spousal support to zero, she testifies that he negotiated with her to have the children live at his house (pays $6,900/month rent); to allay her fears he was using the children as pawns, he promised that if she agreed that the children could reside at his home, he would not seek to reduce or eliminate child support, and he never mentioned that he was going to try to eliminate spousal support and claim financial inability; in an email written on February 9, 2018, he states, “I have no intention of changing the support amount you receive;” ultimately, she agreed that the children could live at his home rather than shuttling between houses.

Mother testifies that father induced her to agree to eliminate child support in an effort to be cooperative; he was falling into arrears in spousal support; he did not mention that he was not going to pay spousal support or that he planned to file another request for orders to eliminate spousal support; he felt that seeking to eliminate both child support and spousal support at the same time would be overreaching; had she known that he planned immediately to seek to eliminate spousal support after she agreed to eliminate child support, she would not have agreed to the stipulated order; appears that he has been scheming to try to eliminate all support while concealing his true intent.

Mother testifies that now again, father claims he cannot pay his basic spousal support obligations; his claim is belied by such things as (a) that for the past three years, he has undertaken to pay exorbitant monthly housing costs ($6,900 per month in rent for a 3 bedroom house), (b) the Court found following the divorce trial that he has great earnings capacity, far greater than hers, (c) the Court found that he is an experienced businessman who impressed the Court with his abilities, (d) he holds a real estate license, operates his-own real estate company and is affiliated with a major real estate agency (Berkshire Hathaway) while working in a lucrative residential home sales market, (d) he admits that he earned approximately a quarter million dollars from the sale of his karate studio business, (e) admits that he has a spouse contributing to the family expenses and whose earnings are community property available to him.

Mother testifies that there needs to be a clear signal given to him that he must be serious and take responsibility in meeting his support obligations; while he claims that he cannot gain mastery over his personal finances, he has a college degree in business administration and economics; he has only paid support for about three and a half years after a marriage of 19 years; she testifies that she is in dire need of legal protection of her spousal support, which she needs to meet her basic living expenses of her modest lifestyle; without continuation of spousal support, she will have to move and sell or rent out her condominium (which she purchased from her share of the marital assets she received in the divorce in order to lower her monthly rent after the children began living full time with father.)

She testifies that she understands that she is entitled to an earnings assignment order in order to enforce the spousal support obligations owed to her; was entitled to have this order issued at the time of the Court’s final support order following the divorce trial; was unrepresented by counsel and unaware of this; she has now asked for earnings assignment and withholding orders; believes that these orders are necessary to help her enforce father’s support obligations since he has a history of attempting to circumvent his financial support obligations.

Mother’s I&E

52 years old; earns $4,166/mo; medical insurance $750/mo; $5,000 cash; $25,000 liquid assets; all other property $130,000; living expenses $2,640/mo [mortgage $1,780/mo with real property taxes of $400/mo]; modest installment debt.

Father’s “Reply” to mother’s response to his RFO to modify spousal support

Filed 5/7; it comprised 20 pages; the Court has read it all but will summarize here: he contends in her FL-350, Mother states: $4166 gross (before taxes) monthly income. Mother’s attached paystub reveals $24,547.75 paid through April 25, 2109. The correct amount is $6136.93 per month. As a tax professional, she understands the difference between gross and net income. Additionally, this gross amount does not include the $539.11 monthly employer contribution to her health insurance premiums; there is also a 401-K benefit listed on Mother’s paystub; contends it can be reasonably assumed that the employer is matching that amount to equal $4400 annually; both benefits should have been listed as part of the Mother’s pre-tax income; Mother’s monthly income is the sum of her gross pay $6136.93 and her pre-tax benefits (insurance paid by employer $53 9.1] and 401k matching $186.64) for a total of $6862.68; in her FL-350, Mother states she receives $100 monthly interest and dividends from an inheritance; during the marriage, she received from Northern Trust, $300 monthly, increasing upon her request to the trust administrator to $3200 monthly for because of the income disruption caused by separation.

As to his own income he acknowledges he will ultimately be successful in the real estate business; did not realize the land and ranch niche was unique in the way listings can go unsold for many months or years; the 11 properties mentioned by the Mother have all been on the market for extended lengths of time; he is working diligently to secure more listings and buyers; again asks for support to be reduced to zero.

Mother’s unauthorized sur-reply

Filed on May 9; it is 91 pages long; the Court will only summarize; she reports: her income for 2017 tax return reflects her wages were a total of $46,195; for 2016 it was $47,119; her 2018 W-2 reflects $50,164 or $4,180 per month. She is currently not entitled to draw on the trust to pay her regular daily living expenses as she stated in her prior declaration; her statement about her estimated monthly trust income remains accurate.

Father’s unauthorized Supplemental Declaration in support of his RFO

Filed 5/10; it is in fact a sur-reply to mother’s declaration in which she opposed his request; it is not authorized; it is 39 pages long; the Court has read it but will only summarize; he reports that he has “new evidence;” he reports that mother has not provided her tax returns as she promised. Additionally, he attaches bank statements that mother has produced. This, of course, is new evidence presented after his RFO was supplied and after his Reply was submitted. He claims that it supports his position and she is making false statements. He claims that mother generated $9,730 per month of after-tax cash income in 2018.

The Court’s Conclusions:

Pursuant to the Geraci case (2006) 144 Cal App. 4th 1278, (and see IRMO McLain (2017) 7 Cal.App.5th 262) the Court is now at least invited if not mandated to weigh each of the factors of §4320. In addition a key in this case is the marital standard of living and how it should be analyzed. The Court is charged with making specific findings regarding the marital standard of living but also to ascertain the extent to which the Court can create support rights and assign support responsibilities equitably measured against the marital standard of living. The marital standard of living is not the absolute measure of reasonable need. It is merely a threshold or reference point against which all of the statutory facts may be weighed. It is neither a floor nor a ceiling for a spousal support award. The Legislature intended it to be a general description of the station in life that the parties achieved at the date of separation. It is a mere reference point. (See In re Marriage of Nelson (2006) 139 Cal.App.4th 1546.)

The Court has made the following determinations:

FINDINGS: At the outset the Court finds father has not sustained his burden of proof to justify any reduction in support. The Court is mindful that father has submitted more than a 100 page of documents and declarations for this hearing alone. Mother is not far behind. This has been the history of this case. Once again the Court has read it all. The Court does not find father’s testimony credible; in any event I find now that his income remains what I imputed and found in 2015 when the case was tried; I continue to impute that income to father; his claim the market has caused him to suffer extraordinary hardship is belied by the fact his living expenses according to his own I&E are $12,518/mo; there has been no change in his lifestyle that is real; it is only a change in timing; he should not be permitted to ignore that factor; in 9/2015 I was impressed with what father had achieved; he appeared at that time to “be an unusually competent businessman;” I also found at that time father has been successful and will continue to be so. I continue to be of the same opinion. The Court fully anticipates he will continue to have a very impressive business curriculum vitae before he is done. In 9/2015 I found father’s income to be $11,500/mo and wages for mother of $3,750/mo and that Mother will never be able to reach the standard of living the parties enjoyed while married and has significant needs that father must assist in meeting. There is really no significant change in father’s income today and mother’s income has improved only modestly.

a. The Court has considered the extent to which the earning capacity of each party is sufficient to maintain the standard of living established during the marriage, taking into account all of the following:

(1) The marketable skills of the supported party; the job market for those skills; the time and expenses required for the supported party to acquire the appropriate education or training to develop those skills; and the possible need for retraining or education to acquire other, more marketable skills or employment.

FINDINGS: Mother has made a real effort to become self-supporting and the Court is impressed with those efforts and what she has achieved; based upon the standard of living these folks enjoyed, the Court finds she will probably never be able to achieve that station in life again. For father to urge she is self-supporting and his support obligation should be reduced to zero as of April 15, 2019, is draconian.

(2) The extent to which the supported party’s present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage to permit the supported party to devote time to domestic duties.

FINDINGS: There were three children the product of this marriage: mother devoted considerable time and effort to those duties and that impaired her entrance into the job market.

(b) The extent to which the supported party contributed to the attainment of an education, training, a career position, or a license by the supporting party.

FINDINGS: Mother’s efforts in maintaining the home front while father devoted his time to creating a successful business must be recognized. Father’s present station in the business community was advanced as a result of her efforts.

(c) The ability of the supporting party to pay spousal support, taking into account the supporting party’s earning capacity, earned and unearned income, assets, and standard of living.

FINDINGS: The Court finds father’s RFO to be decidedly not credible. His efforts to reduce mother’s income consistently is noted by the Court. He has been relentless on this front. Father has been extraordinarily successful and will continue to be so. I am not persuaded by his documents. He has submitted no declarations by any of his peers about what he contends is a sudden and catastrophic crash of his business opportunities; he has not submitted any forensic evidence to support his claim of a devastating crash in his income; he has not used any usual discovery tools to establish what he perceives to be mother’s efforts to conceal income. He has the burden of proof here and I find he has not met it.

(d) The needs of each party based on the standard of living established during the marriage.

FINDINGS: Mother will never be able to reach the standard of living the parties enjoyed while married and she has significant needs that father must assist in meeting. On the other hand, father maintains a very comfortable life style with at least a $12,000/mo cost of living.

(e) The obligations and assets, including the separate property, of each party.

FINDINGS: The Court has considered what father has presented; the Court is not impressed with father’s recitation of the facts; it is simply not credible for someone of his experience and ability.

(f) The duration of the marriage.

FINDINGS: This was a long marriage; mother and father were married on September 17, 1994, and separated on November 1, 2013, after a marriage of nineteen years; at the time the Court entered Judgment in 2015 spousal support was made retroactive to 1/2015; typically the Court considers, at a bare minimum, spousal support will be paid for ½ the length of the marriage except in extraordinary circumstances; such circumstances are not now present in this case.

(g) The ability of the supported party to engage in gainful employment without unduly interfering with the interests of dependent children in the custody of the party.

FINDINGS: Not applicable; the children reside with father.

(h) The age and health of the parties.

FINDINGS: Age does not appear to be a factor. At the time the Court last considered their respective health situation mother appeared to have some significant challenges with which the Court was concerned.

(i) Documented evidence of any history of domestic violence

FINDINGS: Not applicable

(j) The immediate and specific tax consequences to each party.

FINDINGS: Spousal support in this case is likely deductible to father and taxable to mother. That has a favorable impact on father’s cash available for living expenses.

(k) The balance of the hardships to each party.

FINDINGS: Mother’s efforts to acquire the standard of living the couple once enjoyed is not promising; on the other hand father has maintained a much better standard of living.

(l) The goal that the supported party shall be self-supporting within a reasonable period of time.

FINDINGS: Mother has been doing a good job on this front; the Court is very impressed with her efforts. She should be given the chance to work towards that goal.

(m) The criminal conviction of an abusive spouse shall be considered in making a reduction or elimination of a spousal support award in accordance with Section 4325.

FINDINGS: Not applicable

(n) Any other factors the Court determines are just and equitable.

FINDINGS: The Court is not impressed with father’s efforts to once again try to limit mother’s opportunity to reach the standard of living once enjoyed and probably not reachable by her in the near future.