Jody Michael Neal and Karen Lynne Neal
Case No: 1439503
Hearing Date: Tue May 07, 2019 10:30

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

Respondent’s Req. for Order: OSC re Contempt; Req. for Order: Modification Spousal Support

Both parties in pro per

Rulings: Although everything appears to be in the court file, the Court will continue the two matters set for 5/7 one week and make a decision on all three matters at the same time on 5/14. The Court wants to see the children’s college education “statements” that father refers to in his declaration.

Background: This case is presently set for father’s RFO re modification of spousal support for 5/14, mother’s OSC re contempt set for 5/7, and mother’s RFO for modification of spousal support set for 5/7.

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 special issues.

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 change in his spousal support payments; 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 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 that 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 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 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; albeit reports average monthly income over the last 12 months is $4,830/mo; plus $200/mo in dividends/interest and trust income; 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.

The Court’s Conclusions:

Although everything appears to be in the court file, the Court should continue the two matters set for 5/7 one week and make a decision on all three matters at the same time.