Marriage of McCallon CA4/3 ( 2014 )

Filed 12/17/14 Marriage of McCallon CA4/3
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
In re the Marriage of BONNIE and MARK
MCCALLON.
BONNIE MCCALLON,
G050252
Appellant,
(Super. Ct. No. RFLRS035276)
v.
OPINION
MARK MCCALLON,
Respondent.
Appeal from a postjudgment order of the Superior Court of San Bernardino
County, Michael J. Gassner, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.)
Reversed.
David B. Dimitruk for Appellant.
Beverly W. Quinn for Respondent.
* * *
INTRODUCTION
The judgment dissolving the marriage of Bonnie McCallon and
Mark McCallon1 ordered Mark to pay Bonnie $1,100 per month in spousal support, with
no termination date specified. Almost nine years after the judgment was entered, Mark
requested the trial court to terminate his spousal support payments. After an evidentiary
hearing, the court granted Mark’s request. Bonnie appeals.
We conclude the trial court had the jurisdiction to modify the spousal
support obligation, but that it abused its discretion in reducing the payment to zero. We
agree with and follow In re Marriage of West (2007) 152 Cal.App.4th 240. We therefore
reverse the trial court’s postjudgment order.
STATEMENT OF FACTS AND PROCEDURAL HISTORY
Bonnie and Mark married in October 1981, and separated in
September 2002. They entered into a marital settlement agreement (MSA), and the trial
court entered a judgment in March 2003, pursuant to the terms of the MSA. Bonnie and
Mark agreed that Mark would pay spousal support to Bonnie in the amount of $1,100 per
month, “until [Bonnie]’s remarriage, either party’s death, or further order of the Court.”
Additionally, the parties agreed that Bonnie would receive full title to the parties’ real
property (the Alta Loma property), and that Mark would relinquish all rights to the Alta
1
We will refer to the parties by their first names to avoid confusion; we
intend no disrespect.
2
Loma property without monetary offset. The judgment did not include a Richmond
order,2 or a Gavron warning.3
After the judgment was entered, Bonnie received an inheritance of
$200,000 and a one-third interest in a condominium from the estate of her deceased
mother. Bonnie then sold the Alta Loma property and used the proceeds of that sale to
purchase a condominium in Laguna Niguel. Bonnie invested more than $500,000 in a
business, which ultimately failed and went into bankruptcy; no assets were realized from
the bankruptcy estate.
In February 2012, Mark filed an application for an order to show cause,
requesting his monthly spousal support payments to Bonnie be reduced to zero. After an
evidentiary hearing, the trial court granted Mark’s request. Bonnie filed a timely notice
of appeal from the court’s postjudgment order.
2
The courts have approved the use of an order, “which sets spousal
support for a fixed period based upon evidence that the supported spouse will be
self-supporting by the end of the period. Most typically, as in [In re Marriage of]
Richmond [(1980) 105 Cal.App.3d 352], this evidence comes from the testimony of the
supported spouse whose post-dissolution game plan contemplates a point in time at which
he or she will be self-sufficient. It may be the result of completing future education or
training, at which time full-time employment should produce the income necessary to
meet the reasonable needs of the supported spouse.” (In re Marriage of Prietsch &
Calhoun (1987) 190 Cal.App.3d 645, 665.)
3
A Gavron warning, first approved in In re Marriage of Gavron (1988)
203 Cal.App.3d 705, and later codified, provides: “When making an order for spousal
support, the court may advise the recipient of support that he or she should make
reasonable efforts to assist in providing for his or her support needs, taking into account
the particular circumstances considered by the court pursuant to Section 4320, unless, in
the case of a marriage of long duration as provided for in Section 4336, the court decides
this warning is inadvisable.” (Fam. Code, § 4330, subd. (b).) Bonnie and Mark’s
marriage lasted almost 21 years, making it a marriage of long duration for purposes of
Family Code section 4336.
3
DISCUSSION
I.
STANDARDS OF REVIEW
“‘Appellate review of orders modifying spousal support is governed by an
abuse of discretion standard, and such an abuse occurs when a court modifies a support
order without substantial evidence of a material change of circumstances.’ [Citations.]
‘“So long as the court exercised its discretion along legal lines, its decision will not be
reversed on appeal if there is substantial evidence to support it.”’ [Citation.]”
(In re Marriage of Dietz (2009) 176 Cal.App.4th 387, 398.) Any issues regarding the
interpretation of the MSA, where the evidence is undisputed, are reviewed de novo.
(Fillpoint, LLC v. Maas (2012) 208 Cal.App.4th 1170, 1177; see In re Marriage of Egedi
(2001) 88 Cal.App.4th 17, 22 [MSA is governed by legal principles generally applicable
to contracts].) A judgment by stipulation is generally regarded as a contract between the
parties, and is therefore construed and interpreted in the same way as other contracts.
(Roden v. AmerisourceBergen Corp. (2007) 155 Cal.App.4th 1548, 1561.)
II.
THE TRIAL COURT HAD JURISDICTION TO MODIFY THE SPOUSAL SUPPORT AWARD.
Bonnie initially argues that the trial court did not have jurisdiction to
modify Mark’s spousal support payments. The judgment included the following: “It is
ordered, adjudged and decreed that this Judgment may not be amended or terminated
except by an instrument in writing, signed by each of the parties.” (Some capitalization
omitted.) Bonnie argues that because she did not consent in writing to a modification of
the spousal support order in the judgment, the trial court lacked jurisdiction to modify it.
The spousal support provision itself reads, in relevant part: “It is ordered, adjudged and
decreed that [Mark] shall pay to [Bonnie] spousal support in the sum of $1,100.00 per
month . . . commencing October 15, 2002, and continuing thereafter until [Bonnie]’s
remarriage, either party’s death, or further order of the Court, whichever first occurs.”
4
(Italics added, some capitalization omitted.)4 The spousal support provision allows
modification by court order, without the written consent of the parties. Each of the
means by which the spousal support amount could be modified is self-executing—no one
argues that a parties’ death or Bonnie’s remarriage would require written consent.
Family Code section 3651 creates a statutory presumption that a spousal
support order may be modified: “(a) Except as provided in subdivision[] (c) . . . , a
support order may be modified or terminated at any time as the court determines to be
necessary. [¶] . . . [¶] (d) An order for spousal support may not be modified or terminated
to the extent that a written agreement, or, if there is no written agreement, an oral
agreement entered into in open court between the parties, specifically provides that the
spousal support is not subject to modification or termination.” (Fam. Code, § 3651,
subds. (a), (d).) “[N]o specific formula or ‘“magic” words’ are required to preclude
modification.” (In re Marriage of Hibbard (2013) 212 Cal.App.4th 1007, 1017.)
Whether the language of the MSA and the judgment in this case overcomes that
presumption can be determined by reviewing the type of language that courts in other
cases have concluded does or does not overcome the presumption.
In In re Marriage of Hibbard, supra, 212 Cal.App.4th 1007, the appellate
court concluded the trial court did not have the authority to modify the spousal support
award below $2,000 (id. at p. 1017), where the parties’ MSA provided, in relevant part:
“‘[Howard] shall pay to [Lydia] by the 5th day of each month the sum of $4,000 per
month. Said payments may be reduced to an amount to be mutually agreed upon by
4
Both of these provisions in the judgment are essentially duplicative of
provisions contained in the parties’ MSA. The first relevant provision in the MSA reads:
“This Agreement may not be amended or terminated except by an instrument in writing,
signed by each of the Parties.” The second provision reads: “The Court finds that
[Mark] has agreed to pay directly to [Bonnie] as and for spousal support, for [Bonnie]’s
support, the sum of $1,100.00 per month . . . commencing October 15, 2002, and
continuing thereafter until [Bonnie]’s remarriage, either party’s death, or further order of
the Court, whichever first occurs.”
5
[Howard] and [Lydia], after [minor child] reaches the age of eighteen, graduates from
high school and the family residence is sold. Such a reduction will be based upon a
change of living expenses for [Lydia], but shall not be reduced to an amount lower than
two thousand dollars per month, and it is agreed by the parties that spousal support is an
ongoing obligation of [Howard], and will only terminate upon [Lydia’s] death or
remarriage, or the death of [Howard]’” (id. at p. 1010). (See In re Marriage of Bennett
(1983) 144 Cal.App.3d 1022, 1024-1025 [MSA incorporated into judgment specified the
husband’s spousal support obligation “‘shall be non-modifiable and it is expressly agreed
between the parties hereto that no Court shall have jurisdiction to modify said sum in any
way nor to modify any judgment awarding alimony in conformity with the provisions of
this Agreement,’” and provided that spousal support would continue until the wife’s
remarriage, the wife’s death, or the husband’s death, whichever came first];
In re Marriage of Aylesworth (1980) 106 Cal.App.3d 869, 873-874 [language in MSA
that “‘[w]ith the exception of provisions relating to child custody and child support, this
Agreement is intended to be a final, binding, and non-modifiable agreement between said
parties’” was specific enough to overcome the presumption]; In re Marriage of Harris
(1976) 65 Cal.App.3d 143, 147, 150 [parties’ stipulation on the record in open court that,
“‘spousal support . . . is non-modifiable unless . . . petitioner [former wife] remarries or is
deceased’” overcame presumption]; In re Marriage of Hawkins (1975) 48 Cal.App.3d
208, 210, 211 [MSA incorporated into judgment provided, “‘[t]he requirements
contained herein for payments for the support of Wife shall not be modifiable on any
ground’”].)
The language in Bonnie and Mark’s MSA and the judgment is more like
that in In re Marriage of Forcum (1983) 145 Cal.App.3d 599, in which the court
concluded the presumption of Family Code section 3651 had not been overcome, and the
spousal support award was therefore modifiable. A provision in the MSA, which was
incorporated into the judgment, read, “that the agreement was entire and could not be
6
altered, amended, or modified, except in a writing executed by both parties, and that each
party except for provisions contained in the agreement released the other from any and all
liabilities, obligations, and claims, including all claims of either party upon the other for
support . . . [was] insufficient to cause spousal support to be nonmodificable.” (In re
Marriage of Forcum, supra, at p. 604.) The spousal support provision awarded the wife
$425 per month for the first five years, and $1 per year for the next five years. (Id. at
p. 601.) The appellate court found this provision gave the trial court jurisdiction to
modify the amount of spousal support throughout the specified term (i.e., the full
10 years’ postdissolution), and was a specific provision regarding spousal support that
prevailed over the MSA’s more general terms. (Id. at p. 605; see In re Marriage of
Hufford (1984) 152 Cal.App.3d 825, 827, 834-835 [MSA contained the following
language: “‘This agreement is entire. We may not alter, amend or modify it, except by
an instrument in writing executed by both of us. It includes all representations of every
kind and nature made by each of us to the other. This agreement shall be binding upon
and inure to the benefit of both of us, and of our heirs, administrators, executors,
successors, and assigns”; language was boilerplate, and was not specific enough to
overcome the presumption of modifiability in the forerunner statute of Family Code
section 3651].)
The MSA’s general language regarding the finality of the MSA and the
judgment does not permit us to ignore the specific language of the spousal support
provision permitting the trial court to modify the spousal support obligation. “Under
well-established principles of contract interpretation, when a general and a particular
provision are inconsistent, the particular and specific provision is paramount to the
general provision.” (Kashmiri v. Regents of University of California (2007) 156
Cal.App.4th 809, 834.) “[A] specific provision relating to a particular subject will govern
in respect to that subject, as against a general provision, even though the latter, standing
alone, would be broad enough to include the subject to which the more specific provision
7
relates.” (General Ins. Co. v. Truck Ins. Exch. (1966) 242 Cal.App.2d 419, 426.) Here,
the spousal support provision is the more specific because it deals solely with the issue of
spousal support, while the amendment provision applies to the entire judgment; therefore,
the spousal support provision controls.
That the MSA and the judgment reserve the trial court’s jurisdiction to
make orders to enforce the terms of the judgment and MSA, without reserving the court’s
jurisdiction to modify the support provision, is irrelevant. Family Code section 3651
provides for ongoing jurisdiction of all existing support orders, unless the parties’
agreement “specifically” provides that spousal support is not modifiable. “The import of
the statute may not be ‘avoided by drawing inferences as to the intention of the parties’
from general provisions of the agreement which do not contain a specific provision
concerning judicial modification.” (Fukuzaki v. Superior Court (1981) 120 Cal.App.3d
454, 458 [provisions for integration of agreement, incorporation in judgment, and release
of rights were insufficient to overcome predecessor statute of Family Code
section 3651].)
Bonnie raises several arguments on appeal justifying her claim that the trial
court had no jurisdiction to modify the spousal support award, but all of them relate back
to her contentions regarding the content and meaning of the MSA and the judgment. The
rule of finality of judgments is not violated when the judgment specifically gives the
court the right to modify the award of spousal support. The request to modify the spousal
support award was not barred by principles of res judicata. The request for modification
of the spousal support award was not a collateral attack on the judgment. And the
evidence presented by Mark at the hearing on the request to modify was not irrelevant; as
explained ante, the MSA and the judgment did not specifically preclude modification of
the spousal support award, so evidence related to Mark’s request was relevant.
Under the language of both the MSA and the judgment, the trial court
retained jurisdiction to modify the spousal support award.
8
III.
DID THE TRIAL COURT ERR IN MODIFYING THE SPOUSAL SUPPORT AWARD TO ZERO?
“‘Modification of spousal support, even if the prior amount is established
by agreement, requires a material change of circumstances since the last order.
[Citations.] Change of circumstances means a reduction or increase in the supporting
spouse’s ability to pay and/or an increase or decrease in the supported spouse’s needs.
[Citations.] It includes all factors affecting need and the ability to pay.’ [Citation.] ‘A
trial court considering whether to modify a spousal support order considers the same
criteria set forth in Family Code section 4320 as it considered in making the initial order.’
[Citation.]” (In re Marriage of Dietz, supra, 176 Cal.App.4th at p. 396.)5
5
Family Code section 4320 provides: “In ordering spousal support under
this part, the court shall consider all of the following circumstances: [¶] (a) 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. [¶] (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. [¶] (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. [¶] (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. [¶]
(d) The needs of each party based on the standard of living established during the
marriage. [¶] (e) The obligations and assets, including the separate property, of each
party. [¶] (f) The duration of the marriage. [¶] (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. [¶] (h) The age and health of the parties. [¶]
(i) Documented evidence of any history of domestic violence, as defined in Section 6211,
between the parties or perpetrated by either party against either party’s child, including,
but not limited to, consideration of emotional distress resulting from domestic violence
perpetrated against the supported party by the supporting party, and consideration of any
history of violence against the supporting party by the supported party. [¶] (j) The
immediate and specific tax consequences to each party. [¶] (k) The balance of the
hardships to each party. [¶] (l) The goal that the supported party shall be self-supporting
9
The court made the following findings, pursuant to Family Code
section 4320, on the record after the hearing on Mark’s request to terminate spousal
support: Bonnie and Mark’s marriage was a long-term marriage; the marital standard of
living was based on an annual income of more than $100,000; at the time of dissolution
of the marriage, the marital estate owned assets, including a house with significant
equity; Bonnie had a high school level education, but had worked during and after the
marriage, and her physical health would not limit her ability to be employed; both Bonnie
and Mark received inheritances after the dissolution of their marriage; Bonnie had
significant money available to her, and invested about $500,000 in a business, all of
which was lost; and the amount Bonnie lost in her unsuccessful investment was
equivalent to more than 37 years’ worth of spousal support from Mark, based on $1,100
per month.
In In re Marriage of McElwee (1988) 197 Cal.App.3d 902, 905, the wife
was originally awarded $2,500 per month in spousal support from the husband. The wife
also received almost $500,000 as her share of the community assets, equalizing
payments, and proceeds from the sale of a community asset. (Ibid.) The spousal support
award was decreased to $1,800 per month almost three years after the original support
order was issued. (Ibid.) Another two and a half years later, the wife petitioned for an
increase in her spousal support to $3,000. (Ibid.) The trial court denied her request, and
instead decreased the spousal support award to $500 per month, and ordered that the
within a reasonable period of time. Except in the case of a marriage of long duration as
described in Section 4336, a ‘reasonable period of time’ for purposes of this section
generally shall be one-half the length of the marriage. However, nothing in this section is
intended to limit the court’s discretion to order support for a greater or lesser length of
time, based on any of the other factors listed in this section, Section 4336, and the
circumstances of the parties. [¶] (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 4324.5 or 4325. [¶] (n) Any other factors the court determines
are just and equitable.”
10
support payments would terminate completely three and a half years in the future. (Id. at
pp. 905-907.)
The wife appealed. (In re Marriage of McElwee, supra, 197 Cal.App.3d at
p. 904.) The appellate court concluded that the trial court did not abuse its discretion in
reducing the wife’s spousal support. (Ibid.) As is relevant to this case, the appellate
court held that the imprudent investment of personal assets is a material change that may
support a modification of spousal support. (Id. at p. 909.) “[J]ust as lack of diligence in
seeking employment may lead to a refusal to award spousal support [citation], so too may
improvident management of assets, which were sufficient to provide self-sufficiency in
the accustomed lifestyle, justify termination of support and jurisdiction even though such
an order may result in an alteration in the supported spouse’s lifestyle. To hold
otherwise, would encourage profligacy and discourage sound investment and prudent
management to the detriment of all concerned.” (Id. at pp. 909-910.)
In In re Marriage of West, supra, 152 Cal.App.4th 240, the court
distinguished In re Marriage of McElwee. “There is authority that a spouse’s failure to
manage her finances in such a manner as to enable her to become self-supporting justifies
termination of support. [Citation.] The foundation for this authority is that the spouse’s
share of the marital assets was sufficient to provide self-sufficiency in the accustomed
lifestyle. [Citation.] In other words, a party cannot dispose of income-earning property
and expect the supporting spouse to make up the difference. Similarly, it may be
appropriate to impute income to a spouse of sums that could be earned by an
income-producing investment strategy. [Citation.] But such authority is irrelevant here
where [the supported spouse] was not seeking an increase in support to cover the interest
lost when the note was paid off. [¶] Because [the supported spouse] has not sought an
increase in support to cover the loss of income resulting from the exhaustion of the note,
there is no need to consider whether the parties understood and agreed that [the
supporting spouse]’s support obligations would be based, in part, on both the interest and
11
the principal [the supported spouse] would be receiving on the note. It also is not
particularly relevant that there is no evidence, and no evidence from which it might be
inferred, that [the supported spouse] used the principal for anything other than to cover
unexpected expenses or to maintain a standard of living comparable to the marital
standard of living. [¶] It also is unfair to penalize [the supported spouse] for failing to
invest the principal without first warning her that she would be expected to invest it.
[Citations.] In sum, that [the supported spouse] received a substantial cash asset upon
termination of the marriage provides no grounds for later reducing support, and even if it
did, it would be an abuse of discretion to penalize her for failing to invest that asset
without providing her with fair warning of the court’s expectations.” (In re Marriage of
West, supra, at pp. 250-251, fn. omitted.)
Bonnie and Mark stipulated before the hearing on Mark’s request to reduce
support that Bonnie was not given a Gavron warning when the original judgment was
entered. Nothing in the MSA or the judgment evidences an intent by the parties that
Bonnie should become self-sustaining. To the contrary, the MSA gives every indication
that the monthly spousal support being paid by Mark was not sufficient to allow Bonnie
to maintain the marital standard of living, and would therefore continue indefinitely.
No material change in circumstances was established by the evidence
presented at the hearing. Mark’s ability to pay did not diminish, and there was no
significant reduction in Bonnie’s need. (We note that Bonnie’s income increased from
$22,400 annually to $32,364 annually because she was working full time rather than part
time as she had been during the marriage.)
The trial court’s modification of the spousal support order also relied on
Bonnie’s loss of more than $500,000 in a bad business investment, noting that the loss
represented more than 37 years of Mark’s spousal support payments based on $1,100 per
month. We do not see why this information was relevant to the trial court’s order. As
established by the court in In re Marriage of West, supra, 152 Cal.App.4th at
12
pages 250-251, mismanagement of funds intended to make the supported spouse
self-sufficient may be relevant when the supported spouse seeks an increase in support to
offset the income lost by the mismanagement. It is not relevant, however, where the
supporting spouse seeks a reduction in the amount of spousal support, no other material
change of circumstances has been established, and no evidence shows the funds were
intended to make the supported spouse self-sufficient.
On the facts presented in connection with Mark’s February 2012
application for an order to show cause, the trial court abused its discretion in reducing
Bonnie’s monthly spousal support award to zero, and we therefore reverse the
postjudgment order. In light of our conclusion that the trial court has jurisdiction to
modify the spousal support award, our opinion is without prejudice to either party
seeking a modification of the spousal support award on appropriate grounds.
DISPOSITION
The postjudgment order is reversed. We direct the trial court to deny the
application for an order to show cause regarding modification of spousal support.
Appellant to recover costs on appeal.
FYBEL, ACTING P. J.
WE CONCUR:
IKOLA, J.
THOMPSON, J.
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