Marriage of Kress CA2/3 ( 2022 )

Filed 2/10/22 Marriage of Kress CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
In re Marriage of NANCY R. B303371
and ROBERT L. KRESS.
(Los Angeles County
Super. Ct. No. BD519842)
NANCY R. KRESS,
Appellant,
v.
ROBERT L. KRESS,
Respondent.
APPEAL from orders of the Superior Court of Los Angeles
County, Gary D. Roberts, Judge. Reversed and remanded.
Law Office of Leslie Ellen Shear, Julia C. Shear Kushner
and Leslie Ellen Shear for Appellant.
Thompson & Thompson, Blake D. Thompson and Jeffrey S.
Valladolid for Respondent.
Nancy R. Kress (wife) appeals a postjudgment order
reducing the spousal support obligation of Robert L. Kress
(husband) from $5,250 per month, pursuant to their stipulated
judgment of dissolution, to $3,750 per month, pursuant to his
request for an order (RFO) to modify spousal support.
We conclude the trial court abused its discretion in
reducing spousal support, because husband failed to show a
change of circumstances based on an alleged diminution in his
income affecting his ability to pay support. The undisputed
evidence established notwithstanding husband’s partial
retirement, his annual income at the time of the RFO hearing
was actually higher than his income at the time judgment was
entered. Accordingly, we reverse and remand for further
proceedings consistent with this opinion.
FACTUAL AND PROCEDURAL BACKGROUND
I. The 2013 Stipulated Judgment of Dissolution
Husband has been a California attorney since 1972. Wife
obtained a law degree in 1987 but did not pass the bar exam.
The parties were married in 1988. Wife worked part-time
between 1988 and 2002, but she was not employed in any
capacity thereafter. In 2010, after nearly 22 years of marriage,
the parties separated. There are no minor children of the
marriage.
In 2013, the parties entered into a stipulated judgment of
dissolution. As relevant to this appeal, the judgment provided for
permanent spousal support of $5,250 per month, until death,
remarriage, or further order of the court. The judgment stated
wife had not been employed since 2002, and husband earned
$225,000 in 2011. The judgment also stated that absent the
stipulation, the court would have ordered support taking into
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account the factors set forth in Family Code1 section 4320,
including the goal that wife shall be self-supporting within a
reasonable period of time.
The judgment awarded each spouse one-half of the
community portion of the ABA Retirement Funds Wallin, Kress,
Reisman & Krantz Profit Sharing Plan (the ABA Plan), with the
community property portion previously determined to be 68
percent of the entire plan; one-half of the community property
portion of the Rosemead PARS Retirement Enhancement (the
PARS Plan), with the community property portion stipulated by
the parties to be 75 percent of the entire plan; and one-half of the
community property portion of the Public Employees Retirement
System plan (the PERS Plan), with the community property
portion stipulated by the parties to be 75 percent of the entire
PERS Plan. Monthly benefits under the PARS Plan and the
PERS plan were already being paid to the parties.
The judgment confirmed to husband as his sole and
separate property 100 percent of the separate property portion of
the ABA Plan, the PARS Plan and the PERS Plan. The judgment
also confirmed as husband’s separate property 100 percent of his
rollover IRA with Morgan Stanley.
II. Husband Requests Modification of Spousal Support
Following His Partial Retirement
In 2018, five years after entry of the stipulated judgment,
husband filed an RFO to modify spousal support. Husband
asserted his income had dropped by approximately 50 percent
since the 2013 judgment, because although he still worked as city
1 All unspecified statutory references are to the Family Code.
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attorney for the City of La Verne, he had retired as city attorney
for the City of San Gabriel.
On December 13, 2018, the trial court conducted an
evidentiary hearing. Husband testified he was a municipal
lawyer and his firm contracted with smaller cities to serve as
their city attorney. In October 2017, he retired as city attorney
for the City of San Gabriel. He had reached his 70th birthday
and had decided to downsize his practice. At that time, half of
his income from the practice of law disappeared. His sole
remaining client was the City of La Verne. At that time, his
monthly average income attributable to the City of La Verne was
$11,600. Further, he was drawing social security benefits of
$2,473 per month, as well as pension income of $3,425 per month.
In addition, the ABA Plan, a 401k account, had a balance of
about $1,150,000, from which he took a required minimum
distribution at age 71 of $34,768. He also received a distribution
of $8,096 from his IRA account for the year.
Wife, who was 63 at the time, testified she worked part-
time in husband’s law office until about 2002, doing research,
editing and answering the phones. She had no immediate plan to
seek employment. She had a condominium in Whittier owned
free and clear; it was acquired prior to the marriage and was
rented out for $908 per month. She owned a home in Upland,
which was her primary residence and which she occupied part-
time. Her adult son also resided in the Upland home on a full-
time basis; his sole contribution to the household expenses was
paying the gardener. She also owned a home in Massachusetts
where she resided about five months of the year; the
Massachusetts property, on which she owed about $180,000, did
not generate any rental income. She had about $342,000 in the
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ABA Plan, and about $990,000 of equity in real estate. Her 2016
federal tax return showed she had a pension and annuity
distribution of $49,174 from the PERS Plan, the PARS Plan and
the ABA Plan.
In closing argument, husband’s counsel asserted husband’s
retirement at age 70 from his position as city attorney for the
City of San Gabriel, which resulted in the loss of about $10,000
per month in income, amounted to a change of circumstances that
enabled the court to reconsider the $5,250 per month spousal
support agreed to in the judgment. With respect to the required
minimum distributions husband was receiving, counsel argued it
was not appropriate “to force him to continue to maintain a level
of spousal support because he is choosing to draw down on . . .
retirement assets, that he has contributed to during 45 years as
an attorney.” In response to the court’s inquiry, counsel conceded
the judgment did not contain a Gavron warning.2
Wife’s counsel argued husband’s “ability to pay has not
changed significantly, if at all, since the judgment was entered.
So I don’t think that’s a factor the court could consider in
modifying spousal support.”
After hearing testimony and argument, the trial court ruled
as follows: “First, there has been a material reduction in
[husband’s] income. And I am not persuaded that it’s appropriate
to use mandatory distributions as a means of off-setting that. I
do believe that’s double dipping. [¶] Second, I find that the
2 In re Marriage of Gavron (1988) 203 Cal.App.3d 705, 712,
requires “some reasonable advance warning that after an
appropriate period of time the supported spouse [is] expected to
become self-sufficient or face onerous legal and financial
consequences.”
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judgment adequately puts [wife] on notice of her need to become
self-supporting. . . . [¶] The third factor that I take into account
is that [wife] has at least one asset . . . in the form of the home in
Massachusetts that could be used to generate income . . . . [¶]
The question then becomes . . . what sort of modification is
appropriate. Taking into account the marital standard of
living . . . [and] that this is a very long-term marriage and . . . I
assume [husband] would have expected to have to continue to
provide some significant support . . . for some period of
time[,] . . . I find that it’s appropriate to modify the spousal
support to $3,750 a month, retroactive to the date of the filing of
the RFO.”
On April 17, 2019, the trial court signed and filed an order
after hearing that reduced wife’s spousal support from $5,250 to
$3,750 per month based on the following findings: “(1) There has
been a material change of circumstances . . . [¶] (2) There has
been a material reduction in [husband’s] income. [¶] (3) It is not
appropriate to use mandatory retirement distributions to offset
[husband’s] reduction in income. [¶] (4) The Judgment
adequately puts [wife] on notice of her need to become self-
supporting. [¶] (5) It is still possible for [wife] to make some
income toward her own support. [¶] (6) There is no reason that at
the present time [wife] could not obtain minimum wage
employment. [¶] (7) [Wife] has at least·one asset, the home in
Massachusetts, that could be used to generate income. [¶] (8)
Both [wife] and [husband] are able to live an upper middle class
standard of living on the assets they have available. [¶] (9) This
is a long-term marriage. [¶] (10) The Court considered all Family
Code section 4320 factors in rendering its decision.”
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III. Wife Requests The Trial Court to Vacate The April 17, 2019
Order
On May 10, 2019, wife moved to vacate the April 17, 2019
order pursuant to Code of Civil Procedure section 663 and to
reinstate the prior spousal support order, or in the alternative, to
set a new trial. (Code Civ. Proc., § 657.) In addition, wife
requested an award of $20,000 in attorney fees.
On November 26, 2019, the trial court rejected wife’s
challenges to the April 17, 2019 order, stating, “Code of Civil
Procedure section[s] 663 and 659 are not the proper basis on
which to bring this matter before the Court. [¶] The Court finds
the motions to be procedurally inappropriate. [¶] The Court
finds if it were to consider the Motions on their merits, it would
likewise deny them because the Court reviewed the Court file
and reviewed the evidence and is comfortable that the [prior]
decisions . . . were the appropriate ones.” The trial court ordered
husband to pay $10,000 in attorney fees to wife’s counsel, finding
a significant disparity between the parties in terms of their
respective ability to pay attorney fees and costs.
IV. The Appeals
Wife appealed the April 17, 2019 and November 26, 2019
postjudgment orders, in notices of appeal filed October 15, 2019
and June 11, 2020, respectively. The two appeals were
consolidated into the instant case.3
3 The October 15, 2019 notice of appeal in B303371 is timely
because there is no indication notice of entry of the April 17, 2019
order was served by the clerk or by a party. Therefore, the 180-
day rule applies (Cal. Rules of Court, rule 8.104(a)(1)), and
because the 180th day, October 14, 2019 was a court holiday, the
notice of appeal filed the next day was timely. However, the June
11, 2020 notice of appeal in B306505 is untimely, because even if
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DISCUSSION
I. Governing Legal Principles and Standard of Appellate Review
“A spousal support order is modifiable only upon a material
change of circumstances since the last order. ‘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. It includes all factors affecting need
and the ability to pay. Where there is no substantial evidence of
a material change of circumstances, an order modifying a support
order will be overturned for abuse of discretion. [Citation.] ‘The
modification of a spousal support order is reviewed on appeal for
abuse of discretion. In exercising its discretion the trial court
must follow established legal principles and base its findings on
substantial evidence. [Fn. omitted.] If the trial court conforms to
these requirements its order will be upheld whether or not the
appellate court agrees with it or would make the same order if it
were a trial court.’ [Citation.]” (In re Marriage of West (2007)
152 Cal.App.4th 240, 246, italics added.)
II. The Trial Court Abused its Discretion in Reducing Spousal
Support
Wife contends the trial court applied the wrong legal
standard in granting the downward modification of spousal
support. We agree.
A “supporting spouse’s attainment of retirement age may
constitute a material change of circumstances for purposes of a
the 180-day rule applies, the notice of appeal was filed more than
180 days after the November 26, 2019 order. Therefore, the
November 26, 2019 order denying wife’s motion to vacate the
April 17, 2019 order is not reviewable.
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motion to modify a support order, depending on the
circumstances of a given case. The loss of income as a result of a
supporting spouse’s retirement at an appropriate age [may] be
such a case.” (In re Marriage of Dietz (2009) 176 Cal.App.4th
387, 404.) Here, however, the circumstances surrounding
husband’s attainment of retirement age do not support a
reduction in spousal support.
Husband sought a modification of spousal support based on
the assertion his income has been reduced by approximately 50
percent due to his retirement from one of the cities for which he
served as city attorney. However, husband failed to show an
overall change of circumstances based on a diminution in his
income. The evidence established his annual income at the time
of the hearing on the RFO to modify support was actually higher
than the $225,000 income set forth in the judgment awarding
wife spousal support of $5,250 per month.
Specifically, husband’s testimony at the hearing and his
income and expense declaration showed he received an average of
$11,600 per month for his work for the City of La Verne, which
amounted to $139,200 per year. Further, he received social
security benefits of $2,473 per month, amounting to $29,676 per
year, as well as pension income of $3,425 per month, amounting
to $41,100 per year. In addition, the ABA Plan, which is a 401k
account, had a balance of about $1,150,000, from which he drew a
required minimum distribution of $34,768 at age 71. He also
received a distribution of $8,096 from his IRA account for the
year. Thus, at the time of the RFO hearing, husband admittedly
had an income of $252,840 per year, which was higher than the
$225,000 annual income set forth in the stipulated judgment of
dissolution awarding wife spousal support of $5,250 per month.
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There was no other basis to find a change of circumstances
that would justify a reduction in spousal support. Insofar as the
stipulated judgment divided the community assets and awarded
wife one-half of the community portion of the ABA Plan, the
PARS Plan and the PERS plan, those circumstances were
expressly contemplated by and provided for in the judgment.
(See, e.g., In re Marriage of Dietz, supra, 176 Cal.App.4th at p.
400 [“the accessibility and possible increase in value of Laura’s
share of the retirement accounts were part of the parties’
expressed reasonable expectations in entering the 1999
stipulated judgment and cannot constitute a material change of
circumstances on these facts”].)
As for the required minimum distributions from husband’s
401k and IRA accounts, the trial court stated, “I am not
persuaded that it’s appropriate to use mandatory distributions as
a means of off-setting [the reduction in husband’s earnings]. I do
believe that’s double dipping.” We disagree. “ ‘[I]n every case
where one spouse receives permanent spousal support from the
other spouse, the source is from the separate property of the
paying spouse, including . . . earnings or property which were
once the community property of both spouses.’ ” (In re Marriage
of Epstein (1979) 24 Cal.3d 76, 91, fn. 14, superseded by statute
on other grounds as stated in In re Marriage of Walrath (1998) 17
Cal.4th 907, 914.)
With respect to withdrawals from retirement plans, the
court in In re Marriage of Olson (1993) 14 Cal.App.4th 1,
explained, “[w]ithdrawals from retirement plans, when made, are
treated as ordinary income” (id. at p. 12), and “once the
participant reaches age 70 1/2, the court possesses discretion to
consider as income available for spousal support an amount
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greater than the statutorily mandated minimum withdrawals.”
(Id. at p. 13; accord, In re Marriage of Reynolds (1998) 63
Cal.App.4th 1373, 1380 [only investment income, not principal,
should be available to pay spousal support, and husband is not
required to invade or exhaust his retirement assets in order to
pay spousal support]; see Hogoboom et al., Cal. Prac. Guide:
Family Law (The Rutter Group 2021) ¶ 17:212.1.) Here,
however, wife did not seek to impute to husband as income
available for spousal support an amount greater than the
statutorily mandated minimum withdrawals. She merely asked
the trial court to include in husband’s income the required
minimum distribution amounts actually distributed to husband
from his 401k and IRA accounts. The trial court’s failure to
include those actual distributions in husband’s income available
for spousal support was erroneous.
Finally, the trial court based the reduction in spousal
support, in part, on wife’s failure to obtain employment, and it
found no reason why she could not obtain minimum wage
employment. We note wife was 63 years old at the time of the
hearing. Leaving aside whether the judgment adequately placed
wife on notice of her need to become self-supporting, the
judgment stated wife’s last full-time employment was in 1988,
she thereafter worked on a part-time basis, and she had not been
employed in any capacity since 2002. Thus, it does not appear
wife’s failure to secure employment in recent years was a change
in circumstances. Moreover, husband’s RFO asserted a change of
circumstances based on a 50 percent reduction in his income, not
because wife had not taken steps to provide for her own support.
In sum, the trial court abused its discretion in reducing
spousal support, because the undisputed evidence established,
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contrary to husband’s assertion, there had been no diminution in
his income, and thus, no reduction in his ability to pay spousal
support.
DISPOSITION
The April 17, 2019 order reducing husband’s spousal
support obligation from $5,250 to $3,750 per month is reversed,
and the matter is remanded for further proceedings consistent
with this opinion. Wife shall recover her costs on appeal.
NOT TO BE PUBLISHED
KNILL, J.*
We concur:
EDMON, P. J.
EGERTON, J.
______________________
* Judge of the Orange County Superior Court, assigned by
the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
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