Articles and Representative Cases

FAMILY LAW CORNER

The Relationship Between Spousal Support and Child Support

by Jan Mark Dudman

AS FAMILY LAW PRACTITIONERS, we properly treat spousal support and child support as two different, unrelated elements of litigation. Spousal support is primarily discretionary. The foundation of this judicial discretion in spousal support is expressed in Family Code §4320. It is this code section that outlines the criteria to be examined, weighed and considered by the court in rendering a spousal support decision.

Child support is based on a statutory imposed algebraic formula which is presumed to be correct. (Family Code §4055, et seq.). There is little discretion in the determination of child support, which requires that certain numbers be submitted to the mathematical formula on a computer While making the correct child support decision requires the use of the formula/computer program, case law has held such formula-driven determination of permanent spousal support to be absolutely not permitted. See In re Marriage of Burlini, 143 Cal.App.3d65 0993); In re Marriage of Olson, 4 Cal.App.4th 1 (1993).

The Inverse Relationship

Contrary to this initial impression, these two seemingly unrelated areas of family law are actually more like first cousins. They tend to borrow from each other, use similar terms and have an inverse relationship with each other.

The relationship between spousal support and child support has become more prominent as a result of three recent appellate court decisions concerning spousal support....

Marriage of Lautsbaugh, 72 Cal. 4th 1131 (1999) involved an Order to Show Cause modification hearing filed by a former wife to extend and increase spousal support. The Judgment provided that spousal support would end on November 30, 1997 with the court retaining jurisdiction until that date. The youngest child graduated from high school after turning I8 in June, 1997. Wife alleged that as the child support for the youngest child had ended, the termination of child support gave the father more money. Thus, there was a sufficient change of circumstances to permit the court to extend and increase spousal support to her.

Former wife argued that In re Marriage of McCann, 4l Cal.App.4th 978 (1996), was controlling. In McCann, the Court said an increase in child support is a change of circumstances to justify a decrease in spousal support. The trial court agreed, but the Court of Appeal did not. The Appellate Court also said that In re Marriage of Catalano, 204 Cal.App.3d 543 (1988) is to be distinguished from In re Marriage of Lautsbaugh. The trial court's decision was reversed on appeal. The Court of Appeal stated that: "This termination of child support was within the expectations of the original order. That the termination of child support occurred as expected cannot reasonably constitute a change of circumstances justifying an increase in spousal support." (In re Marriage of Lautsbaugh, 77 Cal.App.4th at 1133-34).

Thus, we now have three cases which describe the relationship between child and spousal support: 1) The expected ending of child support is not a change of circumstances to justify an increase in spousal support. In re Marriage of Lautsbaugh (supra); 2) The increase in child support may be a change of circumstances to reduce spousal support. In re Marriage of McCann (supra); 3) The expected termination of spousal support can be a change of circumstances to increase child support. In re Marriage of Catalano (supra). (However, the impact of this ruling of In re Marriage of Catalano now seems to be minimal since the use of DissoMaster for child support).

The Standard of Living

In the case of In re Marriage of Kerr, 77 Cal.App.4th 87 (1999), the trial court ruled that the husband's future grant of incentive stock options and non-qualified stock options was part of his overall compensation package and must be considered in setting both spousal and child support. The trial court ordered husband to pay to wife 40% of his option income as spousal support and child support until both children were no longer Minors at which time wife would receive 25% if this option income. The court awarded this percentage of option Income in addition to "regular" monthly child and spousal support on order to adequately meet the parties' former standard of living.

The Court of Appeal reversed and remanded the case because the trial court's percentage spousal support order "will far exceed the parties' standard of living during or at the end of their marriage." The trial court was instructed to determine the amount of the additional spousal support that would be "just and equitable" using the parties' standard of living as a reference.

The Appellate Court indicated that generally the use of percentages to determine support is appropriate pursuant to Marriage of Ostler & Smith, 223 Cal.App.3d 33 (1990); however, in this case where the option income has the potential to be very large, the trial court needs to set "a maximum amount (of spousal support) proportionate to its findings of the marital standard of living."

The Court of Appeal also revised the ruling regarding the percentage of the option income for child support because the trial court did not make a finding that the amount ordered would not exceed the children's needs. Such a percentage award is apparently permissible if the "court sets a maximum amount that would not exceed the children's needs."

This case makes clear that the standard of living of the parents is a consideration in both child support and spousal support. The standard of living during the marriage is critical in evaluating permanent spousal support while the standard of living or "station in life" after the dissolution is critical in evaluating child support. In re Marriage of Catalano, 204 Cal.App.3d 543 (1988), Marriage of Ostler & Smith (supra).

The Step Down and Incremental Orders

In In re Marriage of Rising, 76 Cal.App.4th 472 (1999), the trial court was asked to order a reduction in spousal support based on a change of circumstances. The evidence had shown that wife had completed her education, and her income and financial situation had improved considerably while husband's situation had deteriorated. The trial court found that there was a change of circumstances to justify a decrease in incremental reductions, but the court gave no reason for the step downs. The Court of Appeal reversed because the trial court did not give adequate reasons for the reductions.

The Appellate Court acknowledged that in those situations where the automatic step down occurs in cases that set the initial level of support, or in cases where there are modification orders increasing support coupled with a later step down, then evidence of decreased need for support is required. That is, a basis in the record is required to justify the automatic step-down in those situations.

However, in the present case, the trial court found that changed circumstances justified a decrease in spousal support to the ultimate step down level. In that situation, where the court had discretion to decrease spousal support to the ultimate step down level and the court implements this step down to ease the impact of the decrease on the supported spouse, the trial court does not need evidence of decreased need at each step down level. To summarize, the Appellate Court stated that: "where the court finds a change of circumstances justifying a decrease in support payment, the court may allow the decrease to be phased in over time, provided at the time it issues its order, the court had discretion to reduce the support payment to the final step down amount. However, the record must clearly indicate that this is what the trial court is doing..."

We now have two different standards for determining incremental reductions in spousal support orders, depending on the situation. It seems that the Appellate Court is borrowing from child support in arriving at this decision.

The Rising case sounds similar to Family Code §4076 which permits a two step phase-in of increased child support under certain conditions. Perhaps, we may next expect appellate cases authorizing a phase-in increase in spousal support, to ease the pain to the obligor, and a phase-in decrease of child support to ease the pain to the obligee.

Conclusion

The lesson to be learned from these cases is that child support and spousal support are interrelated. Thus, if the custodial parent files to increase child support, only, and there is also an existing spousal support order, counsel for the noncustodial parent should consider simultaneously filing for a decrease in spousal support, if it is likely that child support will be increased.

If the obligor spouse files to decrease spousal support and that is likely to occur, counsel for the obligee spouse should consider filing for an increase in child support, especially if there has been no child support increase for years.

Jan Mark Dudman is a family law attorney with his office in Santa Ana. He the appellant in the Lautsbaugh case.

FAMILY LAW CORNER

Change of Circumstances as a Spousal Support Issues

by Jan Mark Dudman

Since the advent of the Statewide Uniform Guidelines for child support (Family Code 4050 et seq.) the notion of change of circumstances to modify child support appears nearly nonexistent, unless there was a stipulation to an amount higher than guidelines.  See Marriage of Laudeman, 92 Cal.App.4th 1009 (2001).

However, in the spousal support arena, the requirement of a material change of circumstances is still alive and well.  This concept is sometimes neglected by family law practitioners.

Modification of spousal support requires a showing of a material change of circumstances.  The trial court has broad discretion in determining what a material change of circumstances is.  In exercising this discretion, the court is to consider the same criteria in Family Code 4320 that the court is to consider at trial in determining spousal support. See Marriage of Terry, 80 Cal.App.4th 921 (2000).

The moving party has the burden to show a material change of circumstances even if the prior order was a stipulation.  See Marriage of Olson, 14 Cal.App.4th 1 (1993).

Although the trial court has this broad discretion to determine what is and what is not a material change of circumstances, there is much case law to “help” the trial court on this issue…

An increase in child support can be a change of circumstances to reduce spousal support.  See Marriage of McCann, 41 Cal.App.4th  978 (1996).  However, the mere termination of child support due to high school graduation is not a change of circumstances to increase spousal support.  See Marriage of Lautsbaugh, 72 Cal.App.4th 1131 (1999).  The expenses attributable to non-incapacitated adult children are not to be considered in a modification hearing.  See Marriage of Serna, 85 Cal.App.4th 482 (2000).

The decision in Serna is from our own local Court of Appeal, Fourth District.  That case distinguished or specifically “overruled” Marriage of Siegel, 26 Cal.App.3d 88 (1972), and Marriage of Paul, 173 Cal.App.3d 913 (1985).  Both of those cases permitted the trial court to consider the expenses related to adult children in awarding spousal support.

A 39 year old pharmacist could not obtain a reduction in child or spousal support because he decided to quit his job and go to medical school. See Marriage of Ilas, 12 Cal.App.4th 1630 (1993).  However, a man in his mid 50s obtained a reduction in spousal support when he left his job as a sales executive to enter the monastery.  See Marriage of Meegan, 11 Cal.App.4th 156 (1992).

According to Marriage of Reynolds, 63 Cal.App.4th 1373 (1998), no one can be compelled to work after age 65 and the paying spouse’s timely retirement at that age is a change of circumstances to reduce spousal support.  However, a spouse cannot retire prematurely in order to avoid paying spousal support.  See Marriage of Sinks, 204 Cal.App.3d 586 (1988); Marriage of Stephenson, 39 Cal.App.4th 71 (1995).

The mere passage of time is not a change of circumstances to modify spousal support.  See Marriage of Heistermann, 234 Cal.App.3d 1195 (1991); Marriage of Christie, 28 Cal.App.4th 849 (1994).  However, these cases were decided prior to the amendment to Family Code 4320(1) which provides that it is the goal that a supported party is to become self-supporting in a non-lengthy marriage within a reasonable period of time generally deemed to be one-half the length of the marriage.  In addition, there is a dicta in Marriage of Baker, 3 Cal.App.4th 491 (1992), supporting the notion that passage of time could be a material change of circumstances.

The supported spouse’s obtaining discharge in bankruptcy court may be a change of circumstances to modify spousal support.  See Marriage of Clements, 134 Cal.App.3d 737 (1982).

A wife’s request for an order seeking husband to apply life insurance naming her as beneficiary where she would pay the premiums does not require a showing of a material change of circumstances.  See Marriage of Stimel, 49 Cal.App.4th 991 (1996).

There is a link of spousal support cases which discuss the concept of “failed expectation,” “unrealized expectations” or “failure of underlying assumptions.”  For example, so long as a spouse has made reasonable efforts to become self supporting, a change of circumstances may exist as an “unrealized expectation” in her inability to do so justifying continued support.  See Marriage of Beust, 23 Cal.App.4th 24 (1994).

However, a “failed assumption” cannot be based on a condition that was assumed to occur.  In Marriage of Aninger, 220 Cal.App.3d 230 (1990), the parties contemplated that wife would sell the family residence and purchase a new residence.  However, wife’s increased mortgage payments for the new residence was not an “unanticipated occurrence” to justify an increase in spousal support.  That increase in mortgage payments having been anticipated is not a change of circumstances. In the same vein, it was anticipated that child support would end at the same time the parties agreed to end spousal support.  Therefore, the anticipated event of high school graduation was not a change of circumstances to justify an increase in spousal support.  See Marriage of Lautsbaugh, supra.

The mere increase in the paying spouse’s income may not be a material change of circumstances to increase spousal support.  The moving party has to show that the original order did not meet that party’s needs before being able to argue that the paying spouse’s increased income is a change of circumstances.  The party seeking the modification must prove what the circumstances were at the time of the prior order.  This burden may be impossible to prove, especially after many years have passed since the original order.  Therefore, it is best to seek a finding from the court or indicate in the stipulation at the original hearing as to whether or not the spousal support order meets the needs of the supported spouse.  See Marriage of Hoffmeister I, 161 Cal.App.3d 1163 (1984); and Marriage of Hoffmeister II, Cal.App.3d351 (1987).

A very interesting case on the issue of change of circumstances was decided in our county in the case of Marriage of Schaffer, 69 Cal.App.4th 801 (1999).  This case approves the non-application of the change of circumstances rule by the trial court.  The appellate court in affirming stated that the material change of circumstances rule cannot be “mechanistically applied in circumstances where one party’s long term conduct over a longer term than just the time since the last OSC may be relevant.”  (69 Cal.App.4th, at 812).

In Schaffer, wife who had a master’s degree and was working on her Ph.D was awarded spousal support with a step-down order.  In the next 15 years, she had six post judgment hearings for modification in which none of the orders extended beyond three years.  Each judge hoped she would become self-supporting.  During these years, wife never sought employment outside of her field of social work, had only two jobs – one she quit and another where she was fired.

The appellate court noted that each time wife came to court for a modification, she was justified based on the asserted failure of an “expectation” that she would find a job in her chosen area.  However, the court stated that the material change of circumstances rule was “designed to prevent repeated attempts to modify support orders without justification, not to circumvent the goal that supported spouses become self-supporting within a reasonable period of time.” (69 Cal.App.4th, at 803-04.)

The court also indicated that at least twice before wife had been admonished by two judges to be serious about becoming self sufficient.

At the last hearing, the trial court refused to extend spousal support holding that wife’s “ongoing poor judgment” in pursuing a career she was admonished not to pursue was justification to reduce spousal support to zero.  The appellate court agreed and indicated that there was no abuse of discretion in reducing support to zero under the circumstances.  “A supported spouse cannot make unwise decisions which have the effect of preventing him or her from becoming self-supporting and expect the supporting spouse to pick up the tab.” (69) Cal.App.4th, at 812.)

Perhaps this article will assist counsel in advising clients who seek modification of spousal support. The most recent scenario confronted by the author concerned a requested spousal support modification based on the following facts: the former wife no longer receiving child support due to the child’s high school graduation, she was paying that child’s college expenses, and former husband’s income had increased since the last order but there was no finding as to whether that last order met her needs.

 Jan Mark Dudman, a graduate of UCLA and Pepperdine Law School, has maintained a practice since 1975, and now offices in Santa Ana.

REPRESENTATIVE CASES

In re Marriage of Lautsbaugh (1999) 72 Cal.App.4th 1131 [85 Cal.Rptr.2d 688]

4th Series Citing Cases

[No. B120546.
Second Dist., Div. Five.
Jun 10, 1999.]

In re the Marriage of STEVE D. and CAROL LAUTSBAUGH. STEVE D. LAUTSBAUGH, Appellant, v. CAROL LAUTSBAUGH, Respondent.

(Superior Court of Los Angeles County, No. KD005152, Douglas Haigh, Temporary Judge, fn. *

(Opinion by Grignon, J., with Turner, P. J., and Armstrong, J., concurring.)

COUNSEL

Law Offices of Jan Mark Dudman and Jan Mark Dudman for Appellant.

Sydney K. Ericson and Marc Edward Mitzner for Respondent.

OPINION

GRIGNON, J.

Appellant Steve D. Lautsbaugh (husband) appeals from a post judgment order of the family law court modifying a spousal support award in favor of respondent Carol Lautsbaugh (wife). Husband contends the family law court erred when it found the expected termination of child support upon graduation of the children from high school constituted a material change of circumstances justifying an increase in spousal support. We agree and reverse.

Facts and Procedural Background

The parties were married for 20 years and were divorced in uncontested proceedings in 1992. There are two children of the marriage: Shelley, born November 21, 1976, and Kevin, born February 23, 1979. Husband was ordered to pay child support to wife in the amount of $325 per child per month until the child graduated from high school. Husband was also ordered to pay wife spousal support in the amount of $489 per month until November 30, 1997. The family law court retained jurisdiction to extend the period {Page 7Z Cal.App.4th 1133} of spousal support. Kevin, the youngest child, graduated from high school in June 1997.

On June 3, 1997, wife filed an order to show cause requesting an increase in spousal support, based on the change of circumstances of Kevin's graduation from high school and the concomitant termination of husband's child support obligations. Wife's income and expense declaration stated: she incurred no expenses for her children's college education; Shelley and Kevin still lived with her rent free; Shelley earned $704 per month; and Kevin earned $236 per month. Husband's responsive declaration and income and expense declaration stated he was contributing to the children's education. Both children attended community college. Wife's income had increased over the six-year period; husband's income had stayed the same.

At the hearing on the order to show cause, the family law court found the termination of child supportto be a material change of circumstances and ordered husband to pay wife $739 per month spousal support commencing December 1, 1997. No termination date was set.

Discussion

[1a] Modification of spousal support requires a material change of circumstances since the last order. (In re Marriage of McCann (1996) 41 Cal. App.4th 978 , 982 [48 Cal.Rptr.2d 864].) A material change of circumstances may be in the form of unrealized expectations. (In re Marriage of Beust (1994) 23 Cal. App.4th 24, 29 [28 Cal.Rptr.2d 201].) A family law court may not find a change of circumstances, however, in the reconsideration of a circumstance which has not changed since the previous order. (In re Marriage Farrell (1985) 171 Cal. App.3d 695 , 703 [217 Cal.Rptr. 397].) Circumstances accounted for in the previous order cannot constitute a change of circumstances. (Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 1999) | 17:147, p. 17-33 .) [2] "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." (In re Marriage of McCann, supra, 41 Cal.App.4th. at pp. 982-983.)

[1b] Here, the facts are not in dispute and the question on appeal may be addressed as a matter of law. In 1992, husband was ordered to pay child support until the children graduated from high school. He was also ordered to pay spousal support to a date certain. When the children graduated from high school, husband's child support obligations terminated. This termination of child support was within the expectations of the original order. That {Page 72 Cal.App.4th 1134} the termination of child support occurred as expected cannot reasonably constitute a change of circumstances justifying an increase in spousal support. fn. 1 Since no other circumstances support the modification, the order must be reversed.

The case of McCann does not require a different result. In McCann, the husband and wife agreed to a certain aggregate support level, based on the wife and children's support needs. That amount was arbitrarily allocated 50 percent to spousal support and 50 percent to child support. Subsequently, the state child support guidelines were amended and the wife sought additional child support. The husband requested a decrease in his spousal support obligation if child support were increased. The family law court increased child support as required by the guidelines and decreased spousal support. The combined support levels increased. The Court of Appeal affirmed, holding that the mandatory increase in child support constituted a change of circumstances, justifying a decrease in spousal support to conform the support obligations to the intent of the parties. The statutory change was unexpected and not within the expectations of the parties at the time of the original orders. The McCann situation is unlike the instant case where the circumstance that the children's graduation from high school would occasion the termination of child support was clearly within the contemplation of the original order.

New State Law Alters Impact of Lautsbaugh

On January 1, 2008 a new statute went into effect in California that significantly changed the impact of Marriage of Lautsbaugh.  That statute is Family Code section 4326.  This code section states as follows:  (a)  In a proceeding in which a spousal support order exists or in which the court has retained jurisdiction over a spousal support order, if a companion child support order is in effect, the termination of child support pursuant to subdivision (a) of Section 3901 constitutes a change of circumstances that may be the basis for a request for modification of spousal support."  Subsection (b) to Family Code 4326 states that this statute remains in effect only until January 1, 2001 unless there is enacted a statute to the contrary.  This new statute seems to overrule the Lautsbaugh case and thereby creates a dilemma for uninformed litigants.  For example:  If parties enter into an agreement for the payment of child support and spousal support and have a child in his or her late teens, when child support ends for that child, the payee spousal has grounds to go to court to request modification of the spousal support order based on the fact that child support has ended.   The payor spouse who entered into this child and spousal support stipulation thinking that the amount of spousal support agreed to is not going to increase unless payee spouse's  income decreases, will be shocked to learn that the ending of child support could result in an increase in spousal support even though payee spouse's income has not gone down.  In two recent cases I resolved the problem presented in Family Code section 4326 by inserting a provision in the stipulation or Judgment that stated:  "The ending of child support is not a change of circumstances regarding the issue of spousal support".

Disposition

The postjudgment order modifying spousal support is reversed. The parties are to bear their own costs on appeal.

Turner, P. J., and Armstrong concurred.

FN *. Pursuant to California Constitution, article VI, section 21.

FN 1. Our case is to be distinguished from In re Marriage of Catalano (1988) 204 Cal.App.3d 543 , 551-552 [251 Cal.Rptr. 370], where the Court of Appeal held that an expected termination of spousal support might nevertheless constitute a change of circumstances justifying an increase in child support, The interests of the child were deemed paramount.